Shadow Treasurer Joe Hockey said small business could face a financial squeeze in the fallout from the global financial crisis.
Speaking at a business luncheon in Melbourne yesterday, Hockey said he believed the Government’s stimulus measures and rising interest rates would impact negatively on millions of workers, families and small businesses.
“I believe the biggest challenge going forward is the cost of funds, particularly for small business, he said.
“It’s the small to medium-sized businesses that cannot raise capital. Their costs of funds are going to increase.”
Hockey believes that higher interest rates and higher taxes will have a negative effect on small business operators.
“They didn’t really get any significant benefit out of the decrease of the cash rate. But they will feel every movement up in interest.”
The Reserve Bank raised its official cash rate by 25 basis points to 3.25 percent last week, sparking what many believe will be the start of an ongoing interest rate rising cycle.
“Banks are going to take a much harder line on capital requirements, on credit requirements to small and medium-sized enterprises,” Hockey said.
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