Earlier today the UK government announced its monthly inflation data which indicated the Consumer Prices Index (CPI) rose by 10.1% in the 12 months to January 2023, down from 10.5% in December 2022 – a slight improvement.
On a monthly basis, CPI fell by 0.6% in January 2023, compared with a fall of 0.1% in January 2022.
While heading in the right direction it remains nowhere near the 2% target policymakers desire.
CI received some feedback on the report from Douglas Grant, Group CEO of Manx Financial Group PLCManx Financial Group PLC – a diversified financial service firm. Grant said that after dodging a recession, inflation has probably peaked and will now will start to fall.
“This is, of course, positive news but businesses will not be jumping for joy just yet having already faced a stormy and turbulent economic environment,” said Grant. “Double digit inflation, an ongoing energy crisis as well as high interest rates together mean that demand for liquidity support in the UK is going to remain at record levels as firms desperately seek vital capital.”
Grant said the many smaller businesses had prepared for the worst by locking into fixed rates but now it is too late for other SMEs that were not as prepared.
“Hence, more should be done at governmental level to help SMEs, the backbone of the UK economy. Our research recently revealed that 22% of UK SMEs that needed external finance and/or capital over the last two years were unable to access it. Indeed, more than a quarter have had to stop or pause an area of their business because of a lack of finance. SMEs continue to struggle with accessing finance and that worryingly, this lack of availability is costing them and the UK economy growth opportunities at a time when it is needed the most. The amount of growth that is being sacrificed is significant and will require new solutions which are designed to address this funding gap.”
Grant reiterated his recommendation for the UK government to provide a permanent government-backed loan scheme which brings together both traditional and alternative lenders to guarantee the future of our SMEs.
“As the government looks for other ways to power the economy’s resurgence, the importance of a permanent scheme should not be understated, it could act as the fundamental difference between make or break for many companies, and in turn, our economy. We very much hope this is something that becomes a reality.”