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|Interest rate reduction sends the wrong message to small businesses|
|Thursday, 04 August 2016|
The Bank of England's decision to lower interest rates, though widely anticipated, sends the wrong message to the smaller company sector, according to Angus Dent, CEO of business crowdlender ArchOver.
"While this reduction may seem a good idea in some respects, the move to stimulate the market to borrow more and save less sends a strong message of ‘no confidence'", said Mr Dent. "Any SME considering raising money is unlikely to be swayed by a cut of 0.25% when rates are already at historic lows. If anything, they will interpret the move as one that creates uncertainty and supports the view that the UK is about to talk itself into recession after the Brexit vote. A more positive message might have been achieved by putting interest rates up."
He added: "It does mean, of course, that returns on offer from P2P platforms like ArchOver might become even more attractive to lenders, but you still need good quality borrowers to provide the projects to lend against."
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