These costs, known as "consequential losses, " might also include overdraft charges or additional borrowing costs.

BBC: UK banks

Nothing focuses managers' minds on maximising profits like having to meet hefty interest charges, and increased borrowing can also cut a firm's tax bill.

ECONOMIST: M&S and Debenhams

In addition to inflation, borrowing costs also reflect real interest rates and the charges made by mortgage lenders to cover their expenses and make a profit.

ECONOMIST: Housing market

They compare borrowing money over a 3 or 5 year period with their charges for one month, and suggest that their rates are cheaper!

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Banks are racing against each other to see which can do the deal with the thinnest spread between interest rates the bank charges on loans and rates it pays on deposits and borrowing, McPeak said.

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That leaves the charges made by mortgage lenders as a source for a real reduction in borrowing costs.

ECONOMIST: Housing market