Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Business

High cost of borrowing puts firms on their guard

by October 17, 2022
October 17, 2022
High cost of borrowing puts firms on their guard

Credit is at its most expensive in more than a decade, finance chiefs have said as they forecast that revenues will fall over the next year.

The cost of borrowing money has reached its highest level since 2010, according to a survey of 87 chief financial officers (CFOs) by Deloitte, the management consultancy.

Forecasts have become significantly more pessimistic about the cost of finance since the government’s mini-budget at the end of last month.

Seventy-seven per cent of finance chiefs rated the level of economic and financial uncertainty as high or very high, up from 61 per cent in the previous quarter and its highest level since the start of the pandemic. CFOs are now predicting there is a 78 per cent chance that Britain will fall into a recession within the next year.

More than half said that their priority was now reducing costs, which has led to a reduced focus on strategies to grow their business.

Fixty-six per cent said that credit was costly, while 39 per cent said that it was not easily available. As a result, taking on debt through bank borrowing or issuing bonds has become much less attractive for companies over the past year. CFOs now prefer equity, or selling shares, as a source of finance, a trend last seen during the credit crunch that followed the global financial crisis of 2008.

The cost of borrowing across the world’s biggest economies has increased over the past year in response to a sharp rise in inflation fuelled by the high price of wholesale energy. The Bank of England, which was the first of the major central banks to start raising rates last December, has implemented six back-to-back rate rises in as many meetings, taking the official interest rate from 0.1 per cent to 2.25 per cent. Interest rates are expected to rise again next month, with financial markets pricing in a one percentage point increase to 3.25 per cent.

Ian Stewart, chief economist at Deloitte, said: “A 12-year period of easy credit conditions is drawing to an end. Corporates are seeing a reset in the cost and availability of credit. Not since the credit crunch have CFOs rated debt — whether that’s bank borrowing or corporate bonds — as being less attractive as a source of finance for their businesses than they do today.”

Read more:
High cost of borrowing puts firms on their guard

0
FacebookTwitterGoogle +Pinterest
previous post
Covid gains fade for small investors
next post
Recession to last until the summer

You may also like

Jeremy Clarkson told to close Diddly Squat farm...

October 7, 2022

Private sector growth flat in August as demand...

August 24, 2022

Liberty Steel plans to cut 440 jobs in...

January 13, 2023

A dark day for British business: Unraveling the...

September 20, 2023

Survey reveals over three-quarters of UK business leaders...

April 13, 2023

Retail prices fall for the first time in...

August 27, 2024

Development Bank of Wales is feeling good with...

May 18, 2023

Mulberry chief calls for ‘tourist tax’ to be...

June 28, 2023

VivaCity partners with Welsh Authorities to encourage change...

May 26, 2023

Soaring Delivery Fees and High Street Resurgence Fuel...

May 28, 2024

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • IVF parents should have right to paid fertility leave, says GMB union

      June 9, 2025
    • Reform UK clashes with Bank of England over interest payments to lenders

      June 9, 2025
    • Trump ally stands firm against ‘big, beautiful bill’ despite pressure: ‘It’ll completely backfire’

      June 8, 2025
    • Rubio condemns assassination attempt on Colombian presidential candidate Miguel Uribe

      June 8, 2025
    • Obama WH physician says Biden doc should have performed cognitive test

      June 8, 2025
    • Trump warns of ‘serious consequences’ if Elon Musk funds Democrats

      June 7, 2025

    Categories

    • Business (8,154)
    • Investing (2,019)
    • Politics (15,571)
    • Stocks (3,136)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved