Just a day after Mark Carney overhauled the Funding for Lending scheme to refocus it on business finance only, new Bank data has shown a fresh drop in lending to UK businesses.
After a rare increase in September, loans to non-financial companies fell back again in October, by £1.1bn. At the same time mortgage approvals were at their highest since early 2008.
"The numbers suggest that, despite the medium-term risk of a housing bubble, banks are much more willing to take a punt on the housing market than on small and medium-sized enterprises (SMEs), and this is consistent with the consumer driven growth that has stylised recent UK output growth," said Carl Astorri, senior economic adviser to the EY ITEM Club.
"For robust UK growth to be sustained over the next couple of years, growth needs to broaden out beyond the consumer."
The fall in business lending compared with an average monthly decrease of £1.3bn over the previous six months, the BoE said in its monthly credit release.
Compared with a year earlier, business lending was down 3.3%. Within the overall lending drop there was a £0.5bn fall on the month in lending to SMEs.
Howard Archer, economist at IHS Global Insight said it was likely business demand for credit "will pick up appreciably" as the recovery takes hold.
"As demand for credit does pick up it is vitally important, for healthy UK growth to continue, that all companies who are in decent shape and who do want to borrow – whether it be to support their operations, lift investment, explore new markets – can do so, and at a non-punishing interest rate.This applies to all companies, whatever their size," he added.
Daniel Solomon, economist at the Centre for Economics and Business Research noted that the annual increase in consumer credit growth came in at £1.6bn and there have only been two instances of faster annual rises in consumer lending growth since September 2007.
"Such increases in lending are welcome news for UK retailers, suggesting a brighter outlook for sales over the all-important Christmas period," added Solomon.
theguardian.com
After a rare increase in September, loans to non-financial companies fell back again in October, by £1.1bn. At the same time mortgage approvals were at their highest since early 2008.
"The numbers suggest that, despite the medium-term risk of a housing bubble, banks are much more willing to take a punt on the housing market than on small and medium-sized enterprises (SMEs), and this is consistent with the consumer driven growth that has stylised recent UK output growth," said Carl Astorri, senior economic adviser to the EY ITEM Club.
"For robust UK growth to be sustained over the next couple of years, growth needs to broaden out beyond the consumer."
The fall in business lending compared with an average monthly decrease of £1.3bn over the previous six months, the BoE said in its monthly credit release.
Compared with a year earlier, business lending was down 3.3%. Within the overall lending drop there was a £0.5bn fall on the month in lending to SMEs.
Howard Archer, economist at IHS Global Insight said it was likely business demand for credit "will pick up appreciably" as the recovery takes hold.
"As demand for credit does pick up it is vitally important, for healthy UK growth to continue, that all companies who are in decent shape and who do want to borrow – whether it be to support their operations, lift investment, explore new markets – can do so, and at a non-punishing interest rate.This applies to all companies, whatever their size," he added.
Daniel Solomon, economist at the Centre for Economics and Business Research noted that the annual increase in consumer credit growth came in at £1.6bn and there have only been two instances of faster annual rises in consumer lending growth since September 2007.
"Such increases in lending are welcome news for UK retailers, suggesting a brighter outlook for sales over the all-important Christmas period," added Solomon.
theguardian.com
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