As we approach the tax year end Dr Emma Black, CEO & Co-Founder of Cascade Cash Management and President of the North East Committee for the Chartered Institute of Securities and Investment, rounds up what the region's business leaders are likely to see in 2024 for interest rates.
Emma says: “We’ve had a tough few years not just here but across the world. The cost of living has risen sharply since 2022. Food and energy prices have rose markedly with supply shocks as a result of the conflict in Ukraine. Moreover, the continued global recovery from the Coronavirus (Covid-19) pandemic has exerted further pressure on prices.
“In the UK, prices of consumer goods and services rose by 9.6% in the year to October 2022 (ONS, 2024), the fastest rise in four decades. While the rise has slowed, inflation remains above target and households continue to face a squeeze.
“As a result of pressure on household budgets, there have been increasing strikes across many sectors and this has led to significant economic disruption. These times have been tough for business leaders and for our region, which continues to fall behind in capital inflows.
“Monetary policy during this time has sought to constrain inflation, and interest rates have risen sharply from 0.10% in December 2021 to 5.25% in August 2023 to dampen consumer spending, slow demand and reduce price growth. This sadly also has exacerbated the impact on households and businesses who have felt increased borrowing costs during this time, particularly for those with variable-rate personal or commercial mortgages.
“Where there are challenges, there are also opportunities and we’ve certainly seen plenty of those for savers over the same time period. Mindful of increasing costs, it’s becoming ever-more important for business leaders to ensure that every pound really does count
and shopping around to do so has never been better!
“Interest rates are strong for those with cash balances and in times of uncertainty, cash buffers tend to remain higher to protect financial resilience. We have been working hard at Cascade to ensure we make savings simple, helping our clients to obtain thousands of pounds of extra interest that otherwise would be left on the table.
“Ensuring you get a fair deal is not always easy. The regulator has raised the spotlight over the last year as providers have failed to pass on rate increases in the same degree to savers as they have to borrowers. The Financial Conduct Authority found in fact that only 28% of the base rate increase was passed on to savers during January 2022 and May 2023 as compared to an average pass-on rate of 80% between 2004 and 2009.
“Our service saves people so much time in trying to find a better home for their cash. We have every single regulated bank and building society in our dataset and at the time of this publication, over 230 providers are in the market offering between them over 6,800 savings products.
“Getting the best selection of those accounts to meet your needs can be hard. Our online platform, AskNeve, generates the best rates for you based on what access you need to your money and splits it over however many banks you prefer. Many opt for full protection under the Financial Services Compensation Scheme and with over 230 providers, we can certainly deliver peace of mind!
“This year interest rate changes are slowing and there remains debate over whether the base rate will be decreased this year. Most feel a base rate decrease to be increasingly likely as we move towards the end of the year, with a view that rates will normalise between 3.50% and 4.50% towards the end of 2025.
“Whatever happens, it feels like the challenges of 2022/23 are slowing for business leaders. If you’ve survived the storm, then it’s probably time to now start considering how you can maximise your opportunity moving forward – and getting more from your cash reserves would be a good place to start!”
More information on Cascade can be found by contacting Emma on Emma.Black@cascade.co.uk