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Economic Factors affecting Business - Part 1


Here is a short series looking at economic factors that have an impact on business, elements that are beyond the control of your business which you should be aware of - and keeping an eye on. There are also a few links to information sources.

Part 1 - Interest rates.

Recently we have experienced a steady level of interest without much fluctuation which can lead to us forgetting the impact it can have if we suddenly see changes. The first and obvious is that a business without a fixed level of interest on a loan can find their cost base increasing significantly if rates were to rise.

The second is from the consumer who similarly could find themselves with less disposable income should the rate of loans and mortgages rise with interest changes. They buy less, the demand decreases and sales slow.

Changes in interest rates hi the headlines so they are easy to spot. The Bank of England is the best source of data for the latest information.

The forecast from the Bank of England (Aug 2019) is that rates will increase to 1.6pc in 2020 and hike further to 2.1pc in 2021

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