Monday 20 July 2009

Bank lending to business down 8 percent

Today's Bank of England Lending report suggests that bank credit conditions for UK businesses has worsened over the last thre months. Bank credit to businesses is down 8 percent on an annualized basis.

Furthermore, in the June CBI Financial Services Survey, banks reported that over the past three months their business volumes fell at the fastest rate since 1991, which was the height of the previous recession.

This sharp fall isn't all down to the banks and the supply of credit. The demand for credit has also declined. The BoE reported that some UK businesses have repaid bank debt using funds raised on the capital markets. The corporate sector has ncreasingly moved away from bank lending. Again, the BoE reported that Bond issuance by investment grade companies has also been relatively strong in recent months.

1 comment:

Anonymous said...

We noticed this in our engineering firm. Money paid from customers dried up in November and December, recovered in spring, but has dived again this month. I wondered if it had anything to do with corporation tax payments from businesses which were profitable last year.