Indications from BoE that interest rates will stay low until at least 2017 may hurt businesses
The sudden plummet in sterling, caused by the Bank of England's indication that interest rates will be anchored to their historic low until 2017 rather than being hiked, could potentially damage UK businesses, Paul Statham CEO and Founder of Condeco Software warns.
Condeco Software is a workplace technology expert which works with 30 of the FTSE 100 and leading businesses across the globe. However, Paul said many companies in the UK will be surprised that there will be no rate hike towards the end of 2015 or start of 2016, as previously suggested by the Bank of England.
Paul issued the warning earlier this morning when he appeared on BBC Radio Four's Today programme.
Paul commented: "This change of plan by Mark Carney, combined with the decrease in the value of pound sterling, could be potentially damaging to UK businesses. We are importers, buying from China, so of course we do not want to see the value of sterling decrease. But it is the forward planning element which is the real issue here, as interest rates effect all businesses and firms need reliable guidance from the Bank of England to plan effectively.
"Mark Carney had earlier suggested that rate hikes could come as early as the end of the year or by early next year, but he has now effectively back-tracked on this by at least 18 months. Many businesses leaders will plan their strategies with the guidance given to them by the Bank of England in mind, so unexpected changes in track like this can be potentially very harmful for companies in the UK. Companies would have already factored in the slow interest rates rise which was expected and would have planned accordingly, but it is the delay which comes as a surprise."