UK lending on the decrease
(22 March 2010 – England) Data from the Bank of England revealed last week, showed that lending to businesses in the UK fell at a record annual pace in January, while broad money supply grew last month at the slowest pace in a decade as the UK struggles to recover.
The figures highlight risks to an economic recovery at a time when both the banking sector and the government are trying to repair their balance sheets.
The BoE data showed that the flow of net lending fell £6.5 billion (A$10.75 million) in January, nearly twice as fast as in December. That pushed the annual rate of decline to 9.3 percent, the biggest fall since monthly records began in 1999.
Separate figures showed Britain's broad money supply expanded by 0.2 percent in February, slowing the annual rate to 3.6 percent; it’s weakest since February 2000.
Howard Archer, chief UK economist at forecasting group IHS Global Insight, said the central bank's Trends in Lending report made for ‘pretty grim reading’.
It is evident that ongoing very weak bank lending to companies is being influenced significantly by low demand for credit in addition to restricted supply, Mr Archer noted.
Nevertheless, the Bank of England's March Trends in Lending survey reinforces concern that ongoing tight credit conditions remain a serious obstacle to significant, sustainable recovery, Mr Archer highlighted
Mr Archer added that a lack of access to credit for smaller businesses remains a particular problem.
The BoE data showed that the flow of net lending fell £6.5 billion (A$10.75 million) in January, nearly twice as fast as in December. That pushed the annual rate of decline to 9.3 percent, the biggest fall since monthly records began in 1999.
Separate figures showed Britain's broad money supply expanded by 0.2 percent in February, slowing the annual rate to 3.6 percent; it’s weakest since February 2000.
Howard Archer, chief UK economist at forecasting group IHS Global Insight, said the central bank's Trends in Lending report made for ‘pretty grim reading’.
It is evident that ongoing very weak bank lending to companies is being influenced significantly by low demand for credit in addition to restricted supply, Mr Archer noted.
Nevertheless, the Bank of England's March Trends in Lending survey reinforces concern that ongoing tight credit conditions remain a serious obstacle to significant, sustainable recovery, Mr Archer highlighted
Mr Archer added that a lack of access to credit for smaller businesses remains a particular problem.
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