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UK companies given breathing space by the new Governor of The Bank of England

By 5th July 2013April 7th, 2022No Comments

 

<br /> Adam Thomas

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Adam Thomas

The new Governor of the Bank of England, Mark Carney, just in his job four days, made his first impression on the British economy yesterday. He indicated that alongside the decision to keep the base rate at a historic low of 0.5% that the base rate is unlikely to rise for the next couple of years. This broke previous protocol, as in the past the Governor has not made announcements hinting at future monetary policy alongside rate decisions.

The FTSE immediately rallied on the back of this unexpected good news, closing the day over 3% higher (the largest one day gain since September 2011). For both companies and individuals this is great news as it reduces the threat of increased monthly interest payments on their debts (banks loans and mortgages etc), at a time when they do not have much money anyway.

These next two years could prove crucial for many companies, who are still effectively just treading water, as keeping the base rate at 0.5% gives them a little more breathing space to get their business into better shape and to try and reduce their debt levels.

Getting companies’ debt under better control is vitally important to companies who want to survive the current economic climate and to better position themselves for when the economy thrives again.

Over 3,700 companies have already taken the decision to outsource their cost management to professional consultants at Auditel and they are benefitting from better cash flow and enhanced profits and as a result are in a better position to reduce their debt burdens.

At a time when there is already plenty to give business owners sleepless nights, knowing that their business costs are being properly managed helps to take away some of the stress and gives them more time to concentrate on running their business