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Inflation harming small businesses

Date Added: 27/09/2011  

Small firms throughout the country may be struggling financially as a result of the high rate of inflation in the UK at the moment.

According to Derek Levy, a partner at UHY Hacker Young, companies are not making the most of their savings, meaning they are effectively losing money due to the low interest rates coupled with inflation of close to five per cent.

The Bank of England expects the rate of inflation to break through the five per cent barrier in the coming months and is showing no sign of wanting to raise interest rates in a bid to control the figure as it spirals further away from the target of two per cent.

Interest rates have been at 0.5 per cent - a record low for the UK - for 30 months in a row and the Bank is unwilling to hike them due to the present fragile state of the British economy.

"In this climate of low interest rates and high inflation, business owners really need to be more proactive and shop around for the best rates, even if these are hard to come by," Mr Levy added.

He therefore called for entrepreneurs to make sure any money they are able to put away is earning as much from interest as possible in order to improve their financial situation and perhaps avoid the threat of a winding up order in the future.

This comes shortly after it was revealed that businessman Colin Thomas has been banned from being a company director for a total of nine years as a result of scams conducted through his Ocean View properties venture.

Celebrities including England and Manchester City footballer Gareth Barry and Martin Roberts, who presents the television programme Homes Under the Hammer, were targeted by the conman, reported the Daily Express.

Posted by Michael Beam

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