FSB calls for interest rate cut

The Federation of Small Businesses (FSB) is calling for an interest rate cut to save millions of small businesses across the country as the Bank of England’s Monetary Policy Committee starts its meeting tomorrow (05 November).

An FSB poll released earlier this week revealed that almost 1.5million small businesses risk going bust with unemployment figures set to rise as a result.

According to the poll, almost three quarters of FSB members backed interest rate cuts in the survey where one third of the 4,633 respondents said they would have to close down if the current credit crisis continued, while more than half recorded a decrease in trade in the last two months.

Just under 40 per cent of respondents said they felt less optimistic about the future in the last two months, while a number indicated that a rise in unemployment figures was a definite reality; around one fifth of people said they had already been forced to reduce their employee numbers, while 32 per cent were considering it.

Another third were considering reducing the number of hours their employees worked, while 14 per cent said they had already cut back on hours. Nearly 70 per cent of small businesses had either put a freeze on hiring or were thinking of doing so.

These findings follow the FSB’s proposal of a £1billion Small Business Survival fund for small firms to help tide them over during the next six months. While the Government has announced it will secure £4billion from the European Investment Bank (EIB), the FSB is calling for that money to be made available now through banks and other routes such as Regional Development Agencies.

John Wright, FSB National Chairman, said:

“These figures show how serious things have become for small businesses owners.

“The first step is for the Bank of England’s Monetary Policy Committee (MPC) to send out the right message this week by cutting interest rates by one per cent. This should hopefully encourage banks to lend and secure the future of millions of businesses.

“We don’t want to head the way of the early 90s when 1,000 small businesses a week were collapsing. This can be prevented if the banks relent and release money and consumers start to spend a bit more. All this is reliant on that cut in interest rates.”

ENDS

Notes to Editors

1. The FSB has over 215,000 members and exists to protect and promote the interests of the self-employed, and all those who run their own business. More information is available at www.fsb.org.uk.

2. The online poll ran between 28 October 2008 and 30 October 2008.

Contacts:

Stephen Alambritis: 020 7592 8112 / 07788 422155
Sophie Kummer: 020 7592 8128/07917628998
Prue Watson 020 7592 8121 / 07825 125695
Marc Shoffman 020 7592 8113 / 07595 067068

For regional FSB contacts please go to www.fsb.org.uk/regions