The Bank of England has confirmed that interest rates will be held at 4.25%, following four consecutive cuts from 5.25% over the past year. While these changes may appear to offer a light at the end of the tunnel for struggling businesses, the reality is the landscape remains deeply challenging for local business owners, writes Sinead Campbell, Head of Money Debt and Quality at Advice NI

Businesses are already contending with the recent increase in National Insurance contributions (NICs) in April, which saw the rate rise to 15%, while the secondary threshold dropped to £5,000. This change means more employees fall within the NIC net, driving up payroll costs at a time when businesses can least afford it.

Add to this the cost-of-living crisis, inflation in core goods and services, and weakened consumer demand, and it’s easy to see why business confidence remains low, particularly in sectors like retail, hospitality, and manufacturing. These industries are heavily reliant on discretionary spending, and when household budgets tighten, they are often the first to feel the impact.

Better borrowing terms isn’t always a solution for businesses. For instance, the burden of legacy debt is evident right across Northern Ireland. In recent years, through the pandemic and persistent economic uncertainty, businesses have taken out loans to stay afloat. Even now, with rates starting to fall, the repayments on those previous debts will remain expensive, and for many, unaffordable. Some face refinancing dilemmas or are stuck with unfavourable terms that will take years to unwind.

Insolvency statistics underline the real scale of the problem. The first quarter of 2025 saw individual insolvencies in Northern Ireland rise by 10% compared to the same period last year, indicating the pressure building within our local economy. Behind each figure is a real business, with real employees and customers, trying to make ends meet. Local business owners are the backbone of our economy and need to feel supported.

There are steps businesses can take to build better resilience. Proactive financial management is essential, not just reacting to pressures, but planning ahead for potential risks and building buffers wherever possible. This includes reviewing budgets regularly, cutting unnecessary costs, and prioritising cash flow.

Exploring alternative funding sources is also important. Government grants, local council initiatives, and community-led support schemes may provide lifelines, not only to bridge short-term gaps but to invest in growth areas. Businesses should also consider long-term strategies such as energy efficiency, digital transformation, and upskilling their workforce. These are practical ways to reduce overheads, improve productivity, and future-proof operations.

Diversifying can also help mitigate risk, whether that means expanding into new markets, developing new products, or rethinking service delivery, spreading revenue streams can make businesses less vulnerable to shocks.

Crucially, businesses don’t have to navigate these challenges alone. Advice NI’s Business Debt Service offers free, confidential, and impartial advice tailored to NI businesses facing financial difficulty. Whether you’re dealing with debt, struggling with repayments, or just uncertain about your next move, trained advisers are on hand to help.

The reality is that falling interest rates alone won’t solve all the problems facing Northern Ireland’s business community, but early intervention, practical advice, and strategic action can go a long way in helping businesses weather the storm. There is a path forward and no one needs to face the challenges alone. With resilience, creativity and the right support, local businesses can survive and thrive again.

In 2024/25, Advice NI’s debt advice service, supported by the Department for Communities, helped 131 businesses with a combined debt of £7.3 million. With a network of 65 member organisations and 300 advisers, the Independent Advice Network stands ready to support any business in need.