Interest Rate Rises Expected
Industry experts predict that an interest rate rise will occur either in the later part of 2014 or early 2015 but will initially be introduced gradually due to the current failure of wages to meet the rises in inflation. However, with recovery from the double dip recession looking increasingly assured interest rate rises are almost certain to be a big topic of discussion between decision makers in the coming months and are almost certain to take effect in early 2015 if not before.
How Is The UK Faring Since Recession?
House prices are on the rise again, with London seeing its largest rise for some time (25% annually in some areas). This is normally a cause for concern when interest rate hikes are being considered however given the stricter mortgage criteria being introduced nowadays, there are less home owners with a high risk of negative loan-to-value.
Unemployment rates, whilst always fluctuating, are slowly improving, with productivity increases showing that there is less uncertainty out there and more demand for product and services. This has in-tern helped the growth of the economy with London being considered a leading force once again.
Are Your Clients Ready For A Rise?
Our recently reported insolvency statistics revealed that there was a drop in Company Administrations of 38% in this quarter compared to the same quarter last year coupled with an 18% drop in Liquidations for the same periods. Therefore, the statistics suggest that businesses are on the up, however there is a feeling amongst insolvency professionals that insolvencies are low because HMRC are issuing less winding up petitions and because banks are allowing bigger businesses to simply pay their interest costs on loans and facilities as opposed to calling them in. I am almost certain that if the likes to HMRC and the Banks are faced with more debt due to businesses being unable to cope with the interest rate rises, then they will call in their debts causing a steep rise in the businesses forced to close.
In readiness for these changes, I would encourage all of our advisors to identify their clients who have high loans or long overdue taxes and to take steps to ensure that they are pre warned of the risks. This way they can take steps to reduce their debts more quickly, consolidate their debts for better rates now (whilst available) and/or prepare for the worst by restructuring their businesses to protect their assets or ongoing trade.
If you feel that you have a client at risk then please feel free to call me as I am happy to provide, no obligation advice to ensure that your future fees are retained for the long term.
If you’re based in London and in need of an insolvency practitioner please get in touch.