Dental Elite’s Paul Wilkinson asks: “The current financial landscape – is it all bad?”
Back in November, the Bank of England base rate increased to 0.5% from 0.25%, with further potential increases planned for May 2018 and beyond. When interest rates are high that can spell bad news for many across the UK – including dental professionals with practice loan repayments. After all, the higher the base rate, the more expensive the loan repayment will be – anyone who is indebted to the bank will realise that the lower the base rate, the better.
At the moment, however, the base rates are still low in comparison to previous years and the increase is nominal, so the rise in repayments is nothing to worry about just yet. If the base rate suddenly shot up to 14.8750%, which is what it was on 6th October 1989, then there would be reason to panic, but because of uncertainty caused by Brexit this will not be the case.
For prospective buyers, the forthcoming increases shouldn't be any cause for concern either as the rate is still at a manageable level. In fact, the present climate may actually be opportune for many buyers, as there may come a time in the near future when rates start to increase at bigger increments. At the moment, money is still cheap, and a base rate rise of 0.25% makes little impact in all reality. Further, you should remember business debt is tax deductible so for a sole trader, the real impact is 0.15% for higher rate taxpayers. Additionally, any savvy bank manager or IFA will stress test any purchase against a much higher base rate before submitting the loan application.
The other upside is that saving becomes much easier as the base rate rises. Thus, for dental professionals looking to make the most of savings vehicles such as Individual Savings Accounts, the interest rate rise could present an opportunity.
As for recruitment, the current economical and political landscape has caused a few problems, as the UK is becoming an increasingly less attractive place to work for European dental professionals. For those already working within the UK – especially dentists that have performer numbers – there is less of a concern, of course, as those who qualify will be given settled status. After 29 March 2019, however, it may be a different story for dental recruitment in the UK.
Those most affected will be dentists waiting to apply for a performer number or currently in the throes of the application process. As it stands the process is taking up to two years in some cases to complete, which means some dentists are likely going to run out of time to qualify for residency rights. For those that are yet to begin the process for a performer number, the time limits may make it less attractive for European dentists to come over to the UK, which is likely to cause shortages moving forward.
The UK’s economy has and will continue to affect the dental profession, but with the right support dental professionals should be able to make it through Brexit unscathed. For expert advice on acquisitions, sales, valuations, finance and recruitment try Dental Elite. With years of experience working with the dental community and a second to none knowledge of market trends, the leading agency can help ensure you achieve optimal results, whatever the economic climate.