The Bank of England is expected to raise interest rates for a 14th time as it battles to rein in inflation that is the highest in the G7
The Bank of England on London’s Threadneedle Street. AFP News

A leading business finance expert has claimed that the latest increase in interest rates is "bad news" for many businesses.

Connor Campbell, who works for personal finance company NerdWallet, suggested the impact of the rise would "add another level of financial strain to businesses across the country that have just settled into the previous interest rate."

Last week, the Bank of England pushed national interest rates higher for the tenth time in a row. The 0.5 percentage point increase brought the base rate figure to four per cent, the highest it has been in 14 years.

The increase came as many small businesses were already having to contend with surging operating costs and the impact of the cost-of-living-crisis on product demand.

Campbell said although tweaks to interest rates were expected, the latest hike would make borrowing more costly for businesses. He said it would also increase mortgage rates for business premises, meaning that many would probably be unable to grow organically this year as they faced further budget restrictions to balance their books.

The interest rates increase is one of the urgent measures being taken to reduce inflation in the UK, after the International Monetary Fund predicted that the country would be the only major economy to plunge into recession this year, with the economy set to contract by 0.3 per cent.

Some economists have claimed that the latest increase will be the penultimate base rate rise, with interest rates peaking at around 4.5 per cent next month, before coming back down.

However, Campbell said he expected further increases throughout the rest of the year, meaning businesses will continue to struggle with tighter spending, creating more economic instability.

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