WITH some traders betting that the Bank of England could raise interest rates before Christmas in response to fuel and food shortages, Scottish business titan Lord Willie Haughey has alluded to a “perfect storm” if rates do go up.

As some analysts bring forward forecasts for interest rate rises and suggest there could be a 0.15 per cent increase in the Bank’s base soon, Lord Haughey said he was concerned for those who have been enjoying low mortgage rates. “Even a small increase could see them having to pay double,” he told The Go Radio Business Show.

He said that while he didn’t see interest rates “going through the roof”, he predicted a 0.5% increase before Christmas.

Sir Tom Hunter added: “We’re not going to get a turkey; we’re not going to get toys – an interest rates rise? I think there might be.”

Any increase would be in addition to two 0.25% rises earmarked for next February and August that will see borrowing rates return to the 0.75% level pre-pandemic by the end of 2022.

Sir Tom also warned of “a few headwinds coming our way” with National Insurance contributions rising and VAT on hospitality and tourism on track to return to the pre-pandemic level of 20% next April.

He also pointed to business rates as “one of the biggest costs we have on the high street”, noting: “It is an antiquated tax.”

Sir Tom said that while companies paid it when 100% of their sales went through physical shops, “now 30-40% or even 50% of a firm's revenue will go through e-commerce but they still pay 100% business rates”. He added: “This cannot be right. It is a stingy nettle to grasp and Rishi Sunak needs to tackle this.”