Base Rate Cuts: When Should I Take Finance?


While the UK’s ‘technical’ recession and ONS data revealed in February set a gloomy tone in consumer news, businesses have been faced with a more pressing decision. With base rate cuts on the horizon, when is the best time to take finance?

In mid-February, the Office for National Statistics reported that gross domestic product (GDP) fell by a larger than expected 0.3% in the three months to December, following a decline in all main sectors and a collapse in retail sales in the run-up to Christmas.

This will have come as little surprise to the many businesses who have been well aware that the UK sank into a technical recession in the second half 2023. 

Despite doom-mongering headlines, the recession is actually as light as it could be, which is why it has been labelled a ‘technical’ recession.

While the 0.3% fall reported by the ONS was larger than expected, it fell just 0.1% in December, with January 2024 numbers looking positive. In fact, most economists expect spending to keep rising as growth in wages outpaces inflation.

Could the tip into recession see the Bank of England bring forward its first base rate cut since the start of the pandemic in March 2020? At present it is expected to cut rates towards the middle of the year, with cuts already priced into fixed rate deals. Or could an overly cautious Monetary Policy Committee may wait until August 2024 to cut rates, to balance the risk of rising inflation?

The uncertainty has left many business owners wondering when the right time to take finance will be. Waiting for the base rate cut might deliver a better deal, but will it mean that opportunities for growth are delayed by the lack of funds?

Ian Adams, BDM at Bathgate Business Finance, said: “Some of our clients are not sure if they should wait for rates to cut before taking finance and given the current uncertainty, it is a difficult decision to make. For some, where the need for finance is not as urgent, it might be more prudent to wait.

“However, we are seeing that, after consideration and consultation with the professionals that support them – like the Bathgate team – they are more focused on the benefits that taking finance can bring to their business and accept that comes with a cost. They are taking comfort both in the fact they can service the debt on current base rates, and in the wide held view that the base rate is due to come down sometime in the future.

“We certainly believe in taking an optimistic view and helping businesses to identify those opportunities whose long-term benefits will outweigh a slightly higher rate of interest on finance secured now.”

The Bank of England’s next review of the base rate is scheduled for 21st March 2024. To discuss if now is the right time for your business to take finance, contact the Bathgate team on or call 0151 625 7323

Image credit: Andrea Sebastiani