Borrowing rates soared following the Liz Truss mini-budget and whilst they have fallen back slightly, there is no sign of a return to the low interest rates we have enjoyed for over a decade any time soon.

There is a direct correlation in the contraction of the housing market and the increased mortgage rates which is compounded by the squeeze on household budgets. Capital Economics predict a peak-to-trough fall of 12% in house prices with estate agents predicting a fall in sales by around 11%.

What does this mean for the wider economy? Estate agents will see a fall in sales commissions, with conveyance solicitors and surveyors also experiencing a fall in activity. However, beyond these sectors, retail spending on furniture, homewares and decoration will all be impacted. Highly geared retailers already having to now service COVID related loans and softening consumer demand due to the cost of living crisis will feel the pinch.

With new home sales also falling compounding the inflationary pressures already in the construction sector, insolvencies in the sector are already on the rise. It is typically the smaller sub-contractors that feel the squeeze first as they are tied into fixed contract rates and less resilient to changes in the commercial environment. Planning and maintaining strong working capital management has never been so vital and we are working to support dozens of businesses facing these challenges.

We are continually advised we have a shortage of new build homes, it will be interesting to see what happens to new build volumes during the recession given the challenges already present within the sector.

Our guide to dealing with these inflationary pressures on business: 'Defusing the inflation time bomb: how to survive and thrive' is available on our website (here) is a must read for all businesses.