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Describe the impact on Santander UK plc of the following: - increased interest rates - decreased taxation rates. - Scottish Highers Business Management - Question c - 2023
Question c
Describe the impact on Santander UK plc of the following: - increased interest rates - decreased taxation rates.
Worked Solution & Example Answer:Describe the impact on Santander UK plc of the following: - increased interest rates - decreased taxation rates. - Scottish Highers Business Management - Question c - 2023
Step 1
Increased Interest Rates
Answer
Increased interest rates can have several impacts on Santander UK plc:
- Higher Costs for Customers: Customers may withdraw their savings to seek better returns elsewhere, which results in fewer deposits for Santander.
- Increased Lending Costs: As interest rates rise, the cost of borrowing increases, potentially leading to a decrease in the number of customers taking out loans.
- Higher Revenue from Loans: While fewer loans may be processed, the income on existing loans or new higher-rate loans can increase revenue for the bank.
Step 2
Decreased Taxation Rates
Answer
Decreased taxation rates can positively impact Santander UK plc in the following ways:
- Increased Profitability: With lower taxes, Santander will retain more of its earnings, leading to increased profit.
- Enhanced Cash Flow: Having more cash available allows Santander to reinvest in the business or offer better products and services.
- Potential for Growth: With improved financial health, Santander might find opportunities for expansion or innovation in its services.