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Bank lending to UK businesses to rise in 2013

May 22, 2013

Ernst & Young (E&Y) Item Club has estimated that lending will rise by 3% to £440bn this year, the first increase in 4 years, stating that the increase is being led by the commercial banks having better access to wholesale funding, and a fall in bad debts.  The estimated rise follows a fall in 2012 of around 5%.  Source BBC

Bank lending to UK businesses to rise in 2013

The Funding for Lending scheme has been widely publicised in the media and we have previously commented on our blogs as to whether there is actually any evidence of it working in our area, particularly in relation to the commercial property market.  The idea of the scheme is for banks to be able to provide cheaper loans and mortgages to businesses on the back of cheap loans from the Bank of England and the scheme is to be extended by another year to 2015.

Without seeming to be cynical, is the extension of the scheme an indication that it has not been that successful to date with banks still not lending or, to the contrary, has it been so successful that a great idea should continue.....

Well we haven't seen that much evidence in the commercial property market to suggest that it has given an element of impetus to get the market moving.  The upwards shift in values in certain sectors of the market has been more to do with an ever decreasing supply of quality products as a result of a stifled construction sector over the last 5 years or so.  Perhaps some support to the construction industry and further relief of empty rates on new developments (beyond the extension of relief already proposed) would assist in getting the market moving, creating jobs and helping business to expand organically...

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