United Kingdom 
South Africa 
There have been many economic shifts recently, from the Bank of England interest rate changes on 06 February 2025, to US tariffs. These economic shifts may feel like they are worlds away from you running your own company. But they do, and will, have an effect on your business.
The Bank of England rate changes: what this means for business borrowing
On 06 February, 7 out of 9 members of the Monetary Policy Committee (MPC) at the Bank of England voted to decrease interest rates from 4.75% to 4.5%. This rate cut will likely translate into lower borrowing rates for SMEs. Some lenders cut rates sooner and for longer than others, so it's important to consider multiple options. If you’re looking for a loan for your business, at Capitalise we can match you with multiple lenders and get the latest offers.
There was an interesting shift in the vote this month from one of the committee members, Catherine Mann. She was one of the only 2 committee members who voted for a 0.5% cut, indicating a complete shift in her views. She stunned analysts as she swung from being the most hawkish member (wanting to increase rates) to the most dovish (advocating for the biggest cut).
What could this mean? Catherine Mann‘s main concern is no longer inflationary pressures. It’s a recognition that businesses might be struggling to raise prices, potentially fuelling unemployment, which could negatively impact consumer demand.
Therefore she now believes policy should focus on fostering economic growth, rather than dampening inflation.
The Bank of England still expects inflation to be ‘sticky’ meaning the cost of energy and other supplies will continue to increase. This may affect their decision-making around future interest rates decisions Therefore, while rates may continue to fall in the early part of this year, small businesses shouldn’t hold out for too long as this may affect borrowing conditions once again later in the year.
The global outlook: impact of US tariffs on UK businesses
The US President, Donald Trump, is making regular announcements around his plans for implementing tariffs and restrictions on how other countries trade with the USA.
We won’t know for sure until they are definite, but so far the most impactful on UK businesses will be a 25% blanket tariff on all aluminum and steel being exported by countries to the US.
This will affect any businesses which use aluminium or steel in their manufacturing processes, or who buy goods with this as a raw material. This may include:
- Steel producers, engineering firms & metal fabricators
- Construction and any with heavy machinery
- Businesses connected to the motor or aerospace sectors
- Packaging, food companies, furniture manufacturers
- Those in the renewable energy supply chain or consumer tech.
UK SMEs will see this impact when the additional costs flow down their own supply chain, which could be later this year, or even sooner.
Businesses should explore alternative UK suppliers to mitigate the risk of disruptions in their supply chains due to these tariffs or consider how they can increase their own prices to offset their increased costs.
In short
Tthe Bank of England’s rate cuts and global changes like US tariffs will affect your business more than you might think. While borrowing may be cheaper for now, rising costs and potential supply chain disruptions are something to watch. It’s a good idea to explore other suppliers and consider adjusting your prices to stay ahead. Staying proactive will help you manage whatever comes next.
