Footwear retailer Colin Temple says coping with interest rate rises like the Bank of England’s recent 0.25% hike is a bit like having children.

“When you get one you can get by OK, but the second one makes it harder and more expensive, and then the third means you’re outnumbered,” he says.

“I reckon the immediate effects of this first one will be quite neutral until we see mortgage payments and prices actually starting to go up, but it doesn’t help consumer confidence that the headlines are talking about there being more interest rate rises to come.”

The central bank’s governor, Mark Carney, has indicated he expects this increase in the base rate, the first for a decade, to be followed by two more over the next three years. The timing and size of those rises is not clear, Carney said, because “the biggest determinate of our outlook is going to be those negotiations ongoing on Brexit – both a transition deal to a new arrangement and what is the longer-form arrangement with the EU”.

With retailers already experiencing a slowdown in sales and consumer confidence fragile, industry associations are echoing the Confederation of British Industry’s analysis: “What’s important is the pace of any future rises.”

Temple is the chief executive of Schuh, a successful fashion-branded footwear chain with 129 stores around the UK and a thriving online operation, and he believes the downside of unwinding the era of historically low rates will be partly counterbalanced by the fact that savers will finally start earning a little more on their bank deposits.

“A lot of our customers rely on the ‘bank of mum and dad’, and anything that helps people’s confidence about their finances is a good thing when they’re balancing up making a purchase,” he says. “At the moment we’re dealing with the fact that the mild start to winter meant a poor start to the boot-selling season, and it doesn’t feel like a buoyant consumer market out there. Like always, the biggest problem is uncertainty.

“When mortgages really start to rise,” Temple concludes, “that’s when people will feel the squeeze enough to change their behaviour.”

Changes in the nature of housing loans over the past decade mean that repayments won’t start to rise immediately for the majority of borrowers. Most mortgages are now on fixed rates and those that are not fixed tend to be held by older borrowers whose mortgages have already been reduced over time.

Of the 8.1m households holding mortgages, 46%, or 3.7m are paying either a standard variable rate (SVR) or a tracker rate, which moves with the official bank rate. The industry body UK Finance estimates that the average outstanding balance on those older mortgages is £89,000, which translates to an average rise in repayments of about £12 a month following the hike in the base rate to 0.5%.

The British Retail Consortium (BRC) says the fragile state of consumer trust and the importance for retailers of the Christmas shopping season mean there was extra pressure on chancellor Philip Hammond to lift confidence in the recent Autumn Budget.

Rachel Lund, the head of retail insight at the BRC, says: “Consumer spending has slowed sharply in the last year as inflation, fuelled by the currency depreciation, has accelerated. At the same time, wage growth has remained frustratingly weak and consumers have compensated by borrowing, with consumer credit returning to pre-crisis levels.

“Higher interest rates will only serve to curb borrowing, squeeze household finances – particularly for the less well off – and reduce spending. So, in an already challenging environment, the risks of a further slowdown in consumer spending have become very real.”

A potent aspect of higher interest rates is the fact many retailers have their own debt problems and will be pinched by higher repayments.

Business turnaround specialist Begbies Traynor has calculated that almost 350,000 UK businesses are suffering significant financial distress, up from 260,000 a year ago when the referendum decision was beginning to make an impact.

The retail and leisure sector has one of the highest concentrations of those distressed firms, along with support services and construction, says Julie Palmer, a regional managing partner at Begbies Traynor.

She says: “As a stand-alone factor, this rise shouldn’t have much of an effect on their viability, but we’re coming up to that golden period of trading for retailers and there is always this magical thing called confidence.”

Food and energy prices are already rising, she added. “And people can’t do anything about that, so when they have to tighten their belts, they cut back on discretionary shopping, restaurants and entertainment.”

The historically long era of low interest rates saw vulnerable businesses over-extend themselves on credit, leaving about 250,000 as ‘zombie firms’ kept alive by cheap loans and a steady supply of cheap labour.

“This rise should not tip businesses over, but many are tottering on the edge, and when rates go up to 1% or 2%, that will definitely tip many over,” says Palmer.

Christian McAleenan, the founder of the online shirt retailer Christian Benedict, says that while many retailers will struggle because of their large exposure to debt “our own finance is locked down, so we don’t expect to see increased borrowing costs in the near future”.

McAleenan, whose Manchester-based firm provides men’s formal shirts through a subscription service, says he feels calm about the interest rate rise because his biggest concern is the strength of the pound.

“As a textile importer, we’re particularly sensitive to how sterling is performing, so anything that helps to strengthen the pound is generally good news. The pound is critical for importers, and most retailers are importing stuff, whether it is food or textiles or anything else.”

“For a lot of shirt retailers an iconic deal is to offer four shirts for £100, and one high street retailer has recently said they can’t continue that [now].

“If higher interest rates help to strengthen the pound, that has to be a good thing because the cost of our shirts comes down every time the pound goes up. A stronger pound will also subdue inflation, so that has to help with consumer confidence in the long run.”