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Vast dive in business lending

 

Russell Lynch
Friday 31 May 2013 09:17 EDT
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The biggest slump in business lending this year raised more doubts about the Bank of England’s Funding for Lending scheme today.

The Bank’s figures showed a  £3 billion fall in loans and overdrafts extended to companies during April, the worst result since last December. The Treasury tried to kick-start the scheme last month by offering bigger incentives for banks to lend to small businesses, although Governor Sir Mervyn King has said the tweaks are “not a gamechanger”.

IHS Global Insight’s Howard Archer said: “There is low demand for credit, with many companies still very wary in the current difficult economic environment.”

Despite an upturn in consumer loans and signs of rising consumer confidence, mortgage lending came to a virtual standstill last month at 53,710. Capital Economics’ Samuel Tombs said: “Approvals are still about 3 per cent below the level at the end of last year and just half of the average level seen in the two decades before the 2008-09 recession.”

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