Business lending data points to a continued squeeze on credit
BANK lending to businesses dropped again in March, official data showed yesterday, raising further criticism that the government is failing in its stated aim to improve credit conditions.
Borrowing by firms fell £3.2bn in the month, the Bank of England revealed, following drops of £4.2bn in February and £3.6bn in January.
That means bank lending to firms has fallen 3.5 per cent in the last 12 months, a steeper drop than in any year since 2010.
Labour MPs said the data proved the government’s project Merlin scheme to boost lending to small businesses “counts for nothing,” and called for a “British investment bank to help small businesses.”
Meanwhile mortgage approvals rose in March and consumer credit expanded by £419m in the month.
However, economists warned the overall level of lending is weak and underlines the poor state of consumer demand.
“It is apparent that consumer appetite for taking on new borrowing is still limited while there is also an ongoing strong desire of many consumers to reduce their debt,” said IHS Global Insight’s Howard Archer. Consumer desire to keep a tight grip on their finances is clearly the consequence of still serious concerns over the outlook for the economy and jobs.”