According to the latest data from the Bank of England, almost £4bn of lending was removed from businesses in the three months to the end of November, although mortgage approvals were higher than the previous three months.
The Bank was reporting on the progress of its Funding For Lending Scheme (FLS), which was launched last August in a bid to boost the flagging economy. Under the scheme, the Bank allows lenders to have cheap funds, as long as they pass them on at advantageous rates to individuals or businesses.
However, some lenders appear reticent to lend to businesses, particularly smaller firms, although some major lenders were expecting to increase their lending “slightly” in 2013, while Lloyds Banking Group insisted it was increasing lending to small concerns.
Meanwhile, calls continue for the Government to accelerate the implementation of the proposed Business Bank, with Matthew Fell, director for competitive markets at employers’ body the CBI saying that it must be put into action without delay to ensure government support is visible and reaching businesses that need it most.
Announced last September, the Business Bank will be a state-backed institution that will combine up to £1bn of new government capital and is expected to leverage up to a further £10bn from private investors to help businesses struggling to find funds from high-street banks.
Business Secretary Vince Cable is insistent that plans for the bank are on track and has recently appointed former Bank of Scotland chief executive Sir Peter Burt to chair it and has named five members for its advisory panel, including Lady Wheatcroft and former general secretary of the TUC, Brendan Barber.
Dr Cable said that the appointments take the bank “one step closer towards delivering more long-term funding for small and medium enterprise”.
As an accountant, Simon Rowe, specialises in corporate finance, business turnaround and insolvency.