Business lending is on course to slump to its lowest level for seven years, a recent report warns.
UK banks will lend £422billion to British firms this year – the lowest amount since 2006. This is well below the £575billion lent in 2008 before the financial crisis.
The recent figures from Ernst & Young underline the crisis facing companies as banks starve them of the funds they need to prosper which poses a serious threat to the economic recovery.
The report also warns that lending will not return to its pre-recession peak until 2017.
Experts fear small firms in particular are struggling to get the funds they need to grow, take on staff and drive the economy.
The further fall in lending this year will disappoint officials at the Treasury and the Bank of England, who launched the £80billion Funding for Lending scheme last summer.
This was intended to increase the flow of cheap loans for households and businesses but whilst there is evidence that mortgage lending is increasing, particularly to first-time buyers, there is little to suggest that small firms are getting access to the money they urgently need.
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