Clearview South March 2014 - Issue 148 - Page 80

businessNEWS Biggest fall in business lending in six months The Bank of England report says net lending to businesses fell by £3.7bn in November, despite attempts to rebalance loans away from mortgages. This was the biggest drop since May, coming as a blow to Mark Carney’s attempt to boost business lending. The Bank of England Governor has attempted to cool down house price inflation and encourage business loans, using measures such as cancelling the Funding for Lending Scheme for mortgages from the start of 2014. The previous lending report - released in October - indicated that the decline in business lending had started to tail off, falling at a relatively low £2.3bn in the three months to the end of August. However, net lending to businesses was down £4.3bn in the following quarter - the three months to the end of November. In the 11 months from the start of 2013, net business lending was down 3.1pc - the same fall as in the same period in 2012. This comes despite increasing demand for loans, according to the BoE’s latest credit conditions research. Low levels of business lending and investment have led to fears that Britain’s economic recovery is an unstable one built on higher consumer spending. “The annual rate of growth in the stock of secured lending to individuals in the year to November remained weak,” the report said. Although alternative methods of financing are growing, six institutions - Santander, Barclays, HSBC, Lloyds, Nationwide and Royal Bank of Scotland - account for 70pc of all business lending, according to the Bank of England. Howard Archer, chief UK and European economist at IHS Global Insight, said an improvement in business lending trends seems likely. “With the UK sustaining a decent level of economic activity and prospects looking relatively bright, it seems highly likely