Australian businessman and finance expert Mark Bouris has warned Australia is “definitely” heading towards a recession as nearly 1700 small businesses collapsed following the Reserve Bank’s March interest rate rise.
New insolvency data shows 625 NSW businesses flagged restructuring or closure since the March 17 rate increase, alongside 500 in Victoria, 325 in Queensland and hundreds more across other states and territories.
Bouris, managing director of Yellow Brick Road, said small business owners and homeowners would bear the brunt of ongoing rate hikes and rising living costs, warning repeated increases through to the end of 2027, combined with possible tax changes, could severely damage the economy.
“Small business close down,” he said. “House prices will fall, people will lose their jobs. People have to sell their houses.”
He said many business owners who borrowed against family homes to stay afloat would be particularly vulnerable, while forecasting “serious” inflation figures over the next two quarters.
Business NSW chief executive Daniel Hunter said small businesses are now carrying close to $200 billion in loans nationwide, including $144 billion in variable-rate debt.
“In just one year, small businesses took on $54 billion in new debt, with around $15 billion of that landing in NSW,” Hunter said, adding: “Every rate rise hits like a hammer.”
He revealed more than 4270 NSW businesses have collapsed this financial year alone.
Major banks have also reported rising mortgage stress, with Westpac and NAB data showing increasing arrears among borrowers.
The Australian Banking Association warned the latest rate rise would create further pressure on households and businesses already struggling with cost-of-living increases, fuel prices and supply chain disruptions.
Source: Daily Telegraph.
