Introducer News

State of the market 2024

Updated: 13 February 2024

Last year UK SMEs once again showed impressive resilience to a challenging macroeconomic environment. Now with 2024 underway, here’s our updated thoughts on the economic situation and what might come next. 

What’s the economic situation now and how have we reacted? 

The November inflation release (20 Dec) was below expectations, with headline CPI falling to 3.9% and core CPI falling 0.6% to 5.1% (consensus 5.6%). Core goods prices drove the bulk of the fall, but services inflation also fell more than expected from 6.6% to 6.3%. 

This has led to expectations that we may be at the turn of the interest rate cycle. With the Bank of England no longer needing to keep raising rates to curb inflation, they’re expected to reduce rates at some point in 2024 to support the economy. While predictions don’t have this starting until Q2, markets are now pricing in ~130bps of cuts by the end of next year.  

As we’ve explained in detail in previous newsletters, the cost of Funding Circle loans is determined by future expectations of interest rates, or more specifically, SONIA (Sterling Overnight Index Average) swap rates. This means that at the start of the year we were able to reduce rates on our loans materially, with our rates now starting from 6.9%.

What might come next?

While we are optimistic for the year ahead, and reductions in inflation and interest rates are most definitely welcome, the outlook remains uncertain. SMEs (along with everyone else) are still facing significant cost challenges. Globally, economic data remains volatile – with German inflation, for example, unexpectedly rising recently – and governments are forecast to borrow record amounts in 2024, which may put upward pressure on interest rates. 

All of this means the future course of interest rates is still unpredictable and it would be brave to make a call on what will happen next. However, irrespective of that, our focus will remain on helping you support your clients.

If you have any questions about this our team is happy to help. Simply get in touch at

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