Banks have taken over £16.5bn in cheap “Funding for Lending” cash but actual lending falls another £300m last month and still the Bank of England says things will improve as rates kick in. Do we really believe that?
Lending by banks and building societies fell by £300m in the first three months of this year, despite access to cheaper funds through the Government’s Funding for Lending scheme. Since its launch last August Banks have drawn down £16.5bn of cheap funds from the Funding for Lending scheme, but total net lending over the same period has still fallen by £1.79bn. The most recent fall of £300m was a big improvement on the last three months of 2012, however, when lending fell by £2.4bn.
Funding for Lending has been credited with delivering a marked improvement in the consumer led mortgage market, where rates have hit record lows and availability has improved, but critics say banks are still shying away from pushing money through to businesses.
The Bank cited lower interest rates on mortgages, personal loans and loans to small businesses as evidence the scheme was working but last week it revealed that lending to businesses fell £3bn in April alone and lending to small businesses fell by £660m in the month. That followed a prior fall of £115m in March.
John Allan, chairman of the Federation of Small Businesses, said relying on the ‘big five’ banks – HSBC, Barclays, Lloyds, RBS and Santander – ‘is clearly not working’.
He said: ‘To get the recovery on a firmer footing businesses need to access finance and greater competition in the banking sector should help this. Business confidence is up, suggesting firms want to invest but to do this many need the finance to make it happen.’
Lending by banks and building societies fell by £300m in the first three months of this year, despite access to cheaper funds through the Government’s Funding for Lending scheme, the Bank of England said today.
Banks have drawn down £16.5bn of cheap funds from the scheme since it launched in August last year, but total net lending over the same period has still fallen by £1.79bn. The most recent fall of £300m was a big improvement on the last three months of 2012, however, when lending fell by £2.4bn.
Taken from This is money Article here
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