Businesses in the UK are losing more than £7bn a year due to a combination of low bank interest rates and above-target inflation, new figures reveal.
Interest rates on business deposits are now at a record low, of just 0.59%, and this combined with inflation running at 3.1% mean that business savings are rapidly declining in value.
The amount of cash held in business accounts that offer no interest at all has also more than doubled since 2009. According to the Bank of England a record £52.9bn is currently deposited in accounts yielding 0% interest.
Mark Giddens, the head of private client services at accountancy firm UHY Hacker Young, said: “Under the Funding for Lending scheme, banks are now getting cheap funding from the Bank of England, which means they no longer need to offer generous interest rates to businesses.”