Interest rates in the UK are currently held at a record of 0.5%, the England governor plans on increasing it in the year 2015. This means when credit is borrowed by an organisation i.e. William King it will help them to finance their business activities; however the interest rate is then charged when the company pays back the money. For example an annual interest rate means if a company takes out £100 if the interest rate is 5% the company will have to pay £5 for every time £100 was saved or borrowed. If there is an increase in the interest rate, customers with debts will have less income to spend because they will be paying interest to the bank which they took a loan from. Sales can fall from the organisation as a result. Also if William Kings …show more content…
Many manufacturing firms have suffered because interest rates are higher, they were increased from 7.75% - 8%. If William kings was to branch out in India it might have to pay more money if they take out loans for any business activities.
Furthermore tax is another challenge which can affect a business such as William King in the UK and India. There are 5 main types of tax , income tax , VAT which value added tax , corporation tax , national insurance and local government. In the UK and India these types of tax affect all the businesses. Income tax is the money taken of an employee’s salary mainly results in less money to spend, also value added tax is the tax which is added on a business’s goods and services, for example some of the products at William king will have VAT tax and it will cause them to increase prices.
Corporation tax is the tax which is put on company profits, this is the most common one at large organisation such as William king, if there is a rise in tax it means the company will keep less of its profits and it will lead the company into less investments and a possible chance of less jobs. On the other hand an increase in National insurance can lead a business to raise its costs and could result in inflation. Lastly the local government collects rates from firms; they can use the law to block any business plans on building new