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Support for a further cut on interest rates

By Nick James
October 20, 2008

Nick James is a Whitley-based entrepreneur who has gone from car park attendant to million pound businessman.

He runs Nick-James.com, an online support club for UK entrepreneurs, offering practical training and advice to those looking to start their own online business.

This week Nick voices his support for a further cut in interest rates…

After the shocking turmoil experienced in the global financial markets which has seen the fall of the Lehman Brothers, and the financial meltdown of a Scandinavian country, The Bank of England has finally been railroaded into cutting interest rates.

This recent cut of half a percent to from 5 to 4.5 per cent is undoubtedly good news for small businesses, but in my view it does not go far enough.

For the past six months consumers have been worried by falling house prices, threats of a looming recession and the fear of unemployment, so inevitably they have been far more cautious and consumer spending growth has slowed.

All the talk about the future of our economy has been nothing but gloom and doom, which has undouttedly made things worse by reducing consumer confidence.

However, just recently, we have been heartened by a drop in the price of petrol at the pumps in the wake of falling oil prices and the news that inflation, which has been so rampant in raising the cost of our weekly food bill, has peaked.

Gordon Brown has bolstered our banking system with billions upon billions of tax payers cash, now I would ask that The Bank of England acts in line with his statement and brings interest rates down further, to 3.5 per cent as soon as possible.

With the realisation that small and medium sized businesses employ a crucial 60 per cent of the U.K’s private sector workforce, surely a further easing in the cost of borrowing and investment is now essential.

The Government must ensure that the grass roots of our economy, successful entrepreneurs and small businesses, succeed and expand.

To do this and to help kick-start the economy, the banks must quickly start providing them with affordable loans.

Many economists and financial commentators are still predicting a global slide into recession.

My message to entrepeneurs and small businesses is that this very moment in time is precisely the point when new opportunities are available to you.

Provided that you control cash flows and re-invest any available profit into growing your business you can ride out this storm.

But to do this you must keep costs as low as possible.

Difficult times inevitably involve changing circumstances and suprisingly some of those being experienced right now can actually help small businesses to succeed in the long term.

The recent glut of redundancies has freed up many talented people who are looking for new opportunities within the business world.

Advances in technology, virtual networks and wireless internet have allowed many small business to forgo the overheads of renting fixed business premises, thereby making substantial savings.

The result has been that there is now nearly twice as much office space available as there was last year.

Hence, there are many really good deals to be had for those who want to take on a new lease or to renegotiate a former one.

Yes, there is definitely hope out there.

After the massive recapitalisation of the major banks conditions are now right for them to start lending to each other again, and more importantly, to individuals and small businesses at affordable rates.

Let’s see a reduction in the base interest rate to around 3.5 per cent by the coming Spring, just the right time to sustain small businesses further and exhilarate consumer spending growth, which will feed into every aspect of our economy.

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