Finance Monthly. 36 Business & Economy ahead of expectations and the Bank continues to forecast inflation falling significantly during the course of the year, with food prices in particular, expected to calm. However, in what has objectively been a difficult week for the Bank, it has continued its tightrope walk between stubborn inflation and an increasingly fragile economy, albeit with small steps. But one wrong move and the consequences could be painful. Whilst a 0.5% rise will be grim reading for mortgage holders, spare a thought for those in Turkey, where the central bank has just raised interest rates by 6.5% to 15%!” Andrew Boyajian, Head of Variable Recurring Payments at Tink “The Bank of England’s announcement that interest rates are rising again, paired with the ongoing cost of living crisis, will undoubtedly leave many floundering when it comes to managing finances. This reality is demonstrated in our latest research, which finds that almost a quarter (23%) of Brits are ‘financially vulnerable’, with the majority (56%) expecting their situation to get worse over the next 12 months*. Finding ways to financially support the UK’s consumers is crucial. Leaning on fintech developments such as open banking-powered Variable Recurring Payments (VRPs), may well form part of the answer and play a role in helping people navigate this financially challenging period. Ellie Sawkins, Investment Analyst, Wealth Club “The Bank has moved onto the front foot this month, raising the base rate by 0.5%. While an increase in rates was all but guaranteed following this week’s sticky inflation figures, sentiment was divided over how high the Bank could go. Too small an increase and the Bank risks being labelled ineffective but too large and it could drive the economy into recession. By a wide margin, the MPC voted for the latter, although opinion was split with two members voting for a hold. Headline inflation was a key driver behind today’s decision, having defied expectations to hold steady at 8.7%. At the same time, core inflation, which strips out more volatile energy and food prices, has continued its march higher, rising at its fastest rate since 1992. Looking for the positives, real GDP increased in Q1 2023, marginally For example, VRPs give consumers more control and visibility of their monthly outgoings as well as greater flexibility over when and how often a recurring payment will occur. Indeed, VRPs are also enabling users to review and change/ cancel any subscription in a few clicks through their bank app, ensuring maximum transparency and control for consumers. In the current challenging economic climate, unlocking new ways to help consumers manage their finances should be at the top of the industry’s agenda — particularly now as people look to navigate the associated financial impact that rising interest rates may bring.” * The research was conducted by Censuswide with 2,010 general consumers in the UK (nat rep) between 17.01.23 and 19.01.23 Douglas Grant, Group CEO at Manx Financial Group PLC says “Fears were confirmed this morning with the Bank of England announcing a 5% base rate, a severe blow to businesses, amidst the already challenging balancing act between inflation and recession. Stubbornly high inflation and only small increases in GDP data have highlighted economic hardship that may be difficult to shake off. SMEs must take this as yet another reminder to review their existing lending structures and ensure they are prepared for further challenges. Many SMEs prepared for these hikes by listening to lenders and locking in their debt into fixed rate structures, but other businesses that were not as forward-thinking face significant uncertainty. expecting their situation to get worse over the next 12 months.* 23% of Brits are ‘financially vulnerable’, with 56%
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