Finance Market – Autumn 2023

In July we saw a drop in inflation with consumer prices falling from an annual increase of 7.9 per cent in June to 6.8 per cent in July. This was the lowest inflation rate since February 2022, and was likely driven by falling energy prices.

Despite this, rising costs continue to be burden small businesses, particularly wages. Between April and June the growth rate in wages was the highest it’s been since 2001.

Inflation continues to be a concern for the Bank of England who have implemented 14 consecutive rises in the base rate of interest, however September saw an end to this as rates were held at their current level of 5.25%. The intention of these raises has been to make borrowing more expensive and encourage people to save, creating less demand for goods, and lowering inflation.

Huw Pill, Chief Economist at the Bank of England, suggested that interest rates may need to be kept at their current levels until 2026 to keep inflation under control.

The pricing of lenders, particularly of those who offer long term investments, is heavily influenced by the economic outlook and anticipated future interest rates. So, when inflation fell recently, and it was anticipated that future interest rate rises will drop, many lenders were able to reduce their pricing.

Lenders, who are of course in the business of lending money, will continue to support ambitious UK businesses and make their products as accessible as possible. Likewise, we will remain committed to getting our clients the funding they need to move their business forward, at the most affordable rates.