Retailers cannot afford for the interest rate to hold for another consecutive month, expert warns

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As the Bank of England has held interest rates at 5.25% in yesterday’s announcement, retailers cannot afford for the interest rate to hold for another consecutive month, retail expert Owen Bassett is now warning. 

Following news that sales fell 4% year-on-year in April, Owen Bassett, from leading UK trade credit insurer Atradius, is now urging the Bank of England to act as retailers are bearing the brunt of the government’s efforts to subdue inflation rates. 

When (and if) the interest rate does fall, retailers are in a strong position to bounce back, after claims trends from the major insurer revealed that payment default claims for retailers fell by 46% in Q1 – a positive sign despite major turbulence in the sector and weak consumer spending.

Owen Bassett, insolvency and retail expert at Atradius UK, says: “Following the news that interest rates have remained stagnant at 5.25% for the sixth consecutive month, retailers cannot afford for the Bank of England to hold the interest rate for much longer.”

“Retail spending over the Christmas period was dampened by the cost-of-living crisis, as households held back on non-essential spending and even cut back on essential spending. We are all being forced to tighten our belts, and sadly retailers are bearing the brunt of the government’s efforts to subdue inflation rates. 

“While sales values hit a record high in January, UK retail sales have decreased by 4% in April 2024, highlighting the falling buying-power of the pound which has resulted in a 7.2% year-on-year footfall decline. The high street, and even online retailers, may be vulnerable, with an expectation that the situation will not improve drastically until the pressures of high interest rates start to ease. 

“On a more positive note, our claims data for Q1 has revealed a 46% decline in payment default claims for retailers – a sure sign that retailers and their suppliers have the resilience to bounce back when the interest rate does fall. Brighter times are coming.”

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