Breathe in – belts are being tightened even further

It was only a small rise, just 0.25% to 0.5%. Pundits were quick to point out that many will only be paying another £20 a so on their monthly mortgage payment if their deal is not fixed. That’s an inconvenience but not too much for most to bear.

But, the reality of the recent interest rise is far-reaching. This won’t be the last hike as the Bank of England tries to control inflation. This small rise – the first for 10 years – will currently have less of an immediate physical impact, but could have a far larger psychological one.

Car retailers will be well aware of this and Pendragon’s recent profits warning is indicative of where the market is heading.

Of course, those selling cars are not alone in the doldrums. All retailers are being hit and the interest rate rise just adds to fears about Brexit and where the economy is headed.

Stalwart of the high street, Marks & Spencer is expected to escalate its store closure programme next year as its profits continue to fall. Whether it is quality food and clothing or a new car, people are set to become even more cautious about spending – no wonder new car sales are plummeting and things are set to worsen.

But, when there is economic gloom, there are always some who prosper and for those planning acquisitions, there could be some attractive prospects in the next few years – but be prepared to drive a hard bargain as those borrowing rates are poised to be creeping up inexorably.

Rachel Gordon
Editor
Auto Retail Network

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