John Mitchell, Managing Director, Christie Finance

Many business operators we speak with held off any long-term investment decisions until after the General Election, or rather until the Bank of England starts to cut interest rates, which is likely to follow soon after the General Election, with economists now forecasting the long waited for cuts to take effect in Q3/Q4.  This should give the new Government a feel-good factor boost, but the reality is rate cuts are going to be slow and drawn out, with no expectation that the rates will return to those enjoyed over the past 15 years.

Although residential mortgage rates and commercial interest rate margins have started to reduce, it will take a prolonged period of base rate adjustments to make a meaningful impact to monthly debt repayments. The first rate cut will of course be a clear signal that the Bank of England is confident that inflation is finally under control and the they will not feel under any pressure to reduce too early, rather a delayed prudent approach is more likely.

Longer term, what can we expect from the new Labour Government?  Well, the shock of the pandemic pushed national debt to a post- World War II high so the Government will have to control spending and, bar an economic growth miracle, raise taxes in some capacity. A commitment to growth through house building and job creation is the economic plan – all of which comes at a price, and no doubt the new regime will constantly remind the public of the economic mess they inherited, and how long it will take to solve the nation’s problems. 

It seems the country is ready for change, and change inevitably brings uncertainty, but the one thing we are certain of is our SME and Corporate client base will continue to adapt and show resilience, providing the best products and services for their clients.

To find out more about what this means for you and your business – Speak to the experts in your region: