Copy article

"For SMEs, today's 0.25% rate cut to 4.25% feels too cautious"

ended 08. May 2025

The Bank of England today cut rates by 0.25% to 4.25%. Newspage asked business owners from a number of different sectors for their thoughts on whether the reduction will be enough to generate confidence and stimulate the economy. Views below.

9 responses from the Newspage community

Copy all

Star Quote
Copy

Editor
Rob Peters
Principal at Simple Fast Mortgage
The Bank pulled its punch. With half the committee split and two members pushing for a bigger 0.5% cut, it’s an indication of internal tension, and that doesn’t scream confidence. For small businesses still battling cost pressures and cautious consumers, this move feels more symbolic than substantial. We needed a statement that the Bank is ready to support growth. Instead, we got a compromise. It might settle markets in the short term, but it won’t move the needle unless we see more decisive action soon.
Star Quote
Copy

Harry Mills
Director at Oku Markets
The Bank of England continues to play it cautiously, which I can understand given the January jump in the inflation rate, but small business owners would welcome further action to lower borrowing costs. Already faced with a high cost level, business owners have recently been attacked by higher taxes, and face an economy of low confidence and anaemic growth. The decision to cut rates today is a positive in helping businesses, but the modest size of the cut may not be enough to meaningfully shift the dial.
Star Quote
Copy

Richard O'Connor
Director at First Mats
While our business has continued to grow year on year, many of our customers say their budgets are getting smaller. We sell to businesses and direct to the consumer, and in either case, the rate cut is a good thing. Anything that improves confidence or frees up spending helps. A bigger cut would have been better, but we live in turbulent times, so a cautious approach by the Bank of England is understandable. It’s not a game-changer, but if it steadies nerves and keeps momentum going, it’s a welcome step.
Copy

Editor
Scott Gallacher
Director at Rowley Turton
Given it's a modest, and not unexpected, rate cut, I can't see there being much reaction from the markets.

Falling rates should aid fixed interest investments, especially for UK investors, and may help support UK consumer-based businesses such as retailers and house builders.
Copy

Editor
Riz Malik
Independent Financial Adviser at R3 Wealth
Any and all reductions in the cost of borrowing are welcome, especially with a lot of business borrowing linked to the Bank of England base rate. This should help improve consumer confidence following the uncertainty after the Budget and Trump's tariffs.
Copy

Editor
Ben Perks
Managing Director at Orchard Financial Advisers
The 0.25% cut was a lot like a teenagers attitude towards homework, do the bare minimum and not a bit more. They've done enought to keep people happy, but there was an opportunity to do so much more to help borrowers. Great to see 2 members opt to reduce by 0.5% and this bodes well for the announcements later in the year.
Copy

Editor
Tony Redondo
Founder at Cosmos Currency Exchange
For SMEs, today's 0.25% rate cut to 4.25% feels too cautious. Add in the three-way split with two MPC members not wanting to cut at all on top of the NI and minimum wage increases, employment law changes and Trump’s tariffs, and this is another nail in the SME sector's coffin. This is serious both for business owners but also for the UK economy as a whole. Whilst the SME sector does not grab the headlines like the FTSE-listed companies, it is the backbone of the UK economy. The MPC is prioritizing the fight to control inflation over the recession risks to a stagnant UK economy. The last six weeks have been especially turbulent, and today’s cut will not boost confidence much. SMEs need bolder support to thrive.
Copy

Editor
Pete Mugleston
Mortgage Advisor & Managing Director at onlinemortgageadvisor.co.uk
A 0.25% cut was baked in for today, and while it would have been nice to see Threadneedle Street be bolder and go for a 0.5% cut, it was unlikely to happen. Still, the cut will be welcomed by borrowers and stimulate some activity in the mortgage market, which is slowly heating up. It should also give a timely boost to the economy, given the past months, but there's still a way to go before consumers start feeling good again.
Copy

Kundan Bhaduri
Entrepreneur, Investor and Landlord at The Kushman Group
This was a timid half-measure at best. We now know that two members of the BoE demanded 4% to counter weak demand (0.1% growth), while two hawks clung to 4.5% despite energy-driven inflation peaking at 3.5% in Q3. For small businesses like us, this quarter-point nod to cautious optimism offers barely any relief. It also ignores rampant business insolvencies (+18% YoY) and stagnant investment. The MPC’s split vote reflects their classic paralysis. The MPC is too scared of imaginary wage spirals to slash rates decisively, yet at the same time there's a naivity about Trump’s tariffs denting exports. I can't emphasise this again every time we have a new MPC meeting, growth needs boldness not baby steps like the one we saw today.