A RISE of just one per cent in interest rates could cost businesses across the UK more than £2 billion in additional borrowing costs next year, according to research published today.
The study from accountancy firm Moore Stephens, which has offices in Edinburgh and Glasgow among its sites across Britain and Ireland, suggested the sum would further rise to £3.3bn in 2016. Even a 0.5 per cent hike would add more than £1bn in the first year and £1.65bn in the second 12 months.
Michael Finch, business recovery and insolvency partner at Moore Stephens, said: "The economy is definitely improving, but interest rates rises could threaten the recovery.
"We need to ensure that the increase in interest rates is the equivalent of taking away the punchbowl, not turning off the oxygen.
"Businesses need to be realistic and start budgeting for a higher cost of debt now so that they are not caught out when interest rates do go up."
Bank of England Governor Mark Carney has suggested rates will rise from the current level of 0.5 per cent when data suggest the economy is stronger.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article