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Business lending 'dropping fast'

Date Added: 09/01/2013  

Small companies across the UK are likely to still be struggling to access business lending, according to the release of official figures from the Bank of England.

Dr Adam Marshall, director of policy at the British Chambers of Commerce (BCC), explained the statistics show business lending is falling at the fastest rate for almost a year.

Data revealed by the Bank of England indicated that lending to firms fell by £2.8 billion in November 2012, which was the largest monthly decline since February 2012.

It was also pointed out by the Bank that net lending to business contracted by £17.1 billion in the 12 months leading up to November 2012.

"Although these figures partly reflect the continued uncertainty in the outlook for the UK economy, they also confirm that businesses are still unable to secure credit, particularly young, fast-growing [small to medium-sized enterprises]," said Dr Marshall.

He added that there are examples of businesses all over the country that want to grow but are unable to secure the financing they need in order to do so.

"The government should therefore turn their rhetoric on the Business Bank into reality, to help viable and fast-growing companies get access to capital," recommended Dr Marshall.

His comments come only a short time after chief economist at the BCC David Kern called for the Bank of England's Monetary Policy Committee (MPC) to do more to improve the business lending situation in the UK.

Mr Kern predicted interest rates are going to be held at their current record low for the UK of 0.5 per cent for the foreseeable future, while noting that the quantitative easing programme is going to be retained at £375 billion.

He argued the MPC should instead be seeking to improve business lending conditions in order to boost access to loans for those companies in need of finance.

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Posted by Michael Beam

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