Firms see lending ease up – but for how long?

Credit restrictions faced by small businesses were relaxed in August, new data has shown.

The Bank of England's Trend in Lending Report revealed that lending to businesses grew by £300 million month-on-month.

However, this follows a contraction in lending to £2.5 billion in July – the increase has eased down the rate of decline.

Lending has now only fallen by 5.4 per cent on the previous year, making August's figure the least negative in 14 months.

Despite the small improvement, provisional data for September indicates that the upward trend is unlikely to continue.

UK banks have said that the decline is partly due to subdued demand, with more small firms focused on working within existing margins.

In a statement, the Bank said: "Data from the major UK lenders indicated that net lending to businesses weakened in September."

Posted by Christopher Evans

Published on: October 21, 2010

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