U.K. lending to companies fell in February, underlining the struggle policy makers are facing to boost credit, figures from the Bank of England show.
Net lending dropped by 2.8 billion pounds ($4.3 billion) after a 300 million-pound decline in January, the central bank said in its Trends in Lending report published today. In the three months through February, the stock of lending to both small and medium-sized enterprises and large businesses also contracted, it said.
The BOE and the U.K. Treasury set up the Funding for Lending Scheme last year to boost credit and encourage an economic recovery. With the program having only a limited impact on business lending, the Monetary Policy Committee said this month that it “saw merit” in extending it. A survey on April 3 showed that the availability of credit for so-called SMEs was “little changed” in the first quarter.
“The stimulus from the FLS and the asset-purchase program were likely to support a gradual recovery, although there had been some signs on the month that the pace of improvement in credit conditions had eased and net lending had so far remained subdued,” the MPC said in the minutes of its April 3-4 meeting, published April 17.
Today’s report showed that business lending fell at a three-month annualized rate of 4.4 percent in February. That’s an acceleration from the 4 percent decline in January and the 3.6 percent drop in December.
The data on mortgages was more positive, with net lending rising by 900 million pounds in February. The three-month annualized growth rate was 0.7 percent, up from 0.5 percent in January.
To contact the reporter on this story: Fergal O’Brien in London at firstname.lastname@example.org
To contact the editor responsible for this story: Craig Stirling at email@example.com