The Bank of England has cut interest rates from 4.25% to 4%, marking its fifth reduction since last August and bringing borrowing costs to their lowest level in over two years.
Commenting on today’s interest rate cut and how Chancellor Reeves can support British businesses, Douglas Grant, Group CEO of Manx Financial Group, said: “While the Bank of England’s decision to cut interest rates to 4% offers some relief, the broader environment remains tough for UK SMEs. Ongoing cost-of-living pressures and geopolitical instability continue to erode business confidence.
“Recent research from Manx Financial Group shows that nearly a third of UK SMEs have had to pause or shut down parts of their operations due to a lack of finance over the past two years. Meanwhile, 38% expect no growth in the year ahead, up from 25% in 2024, highlighting the urgent need for a more stable and inclusive lending environment.
“Despite these headwinds, SMEs remain resilient and ambitious. With the right backing, they believe they could grow by up to 13% over the next year. This is a pivotal moment, not just to avoid stagnation, but to ignite broader economic renewal.
“To unlock this potential, we urge the government to adopt five urgent policy priorities. First, support exports and manage currency risk by widening access to international markets and providing financial tools to help SMEs navigate global volatility.
“Second, strengthen supply chains and digital scalability to boost resilience and unlock new trading opportunities.
“Third, reform credit access and incentivise investment in digital and green technologies, making it easier for SMEs to raise capital.
“Fourth, modernise tax and pension systems to foster innovation, attract capital and reflect the needs of a modern, agile economy.
“Finally, launch a national digital skills accelerator to address workforce gaps in AI, tech and green industries, key sectors for future growth.
“SMEs operate in a landscape reshaped by economic, political, and technological change. Business leaders must adapt their strategies to navigate risks and seize opportunities.
“Accessing affordable credit and leveraging monetary easing will be critical. With decisive action, the government can help unlock the full potential of Britain’s SMEs, and in doing so, bolster the UK’s long-term economic strength.”
Mark Barrie, head of debt advisory at UK top 10 accountancy and advisory firm Azets, also reacted to the news.
Mark said: “Today’s reduction makes sense, given rising unemployment, the continuous fall in job vacancies, sticky inflation, spiralling national debt, a dire fiscal outlook and persistent cost pressures since April on business, including the increases in national insurance contributions and minimum wage.
“Being able to borrow money at a lower interest rate will make life a little easier for many companies which need debt to grow or to keep their heads above water.
“Anything to help ease the cost of borrowing money is welcome – the Office for Budget Responsibility states that the UK has the sixth highest debt, fifth highest deficit and third highest borrowing costs among 36 advanced economies.
“It was in early 2023 that the Bank of England’s interest rate was previously at 4% – Flowers by Miley Cyrus was a break-up number one in the charts at the time. The economy is wilting and needs nourishment through cheaper borrowing.”
