'Disappointing' start for Bank lending scheme

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The Bank of England's Funding for Lending (FLS) scheme made a "disappointing" start in August as loans to businesses and households dropped by £5bn, experts said yesterday. The steep fall contrasts with an average monthly £900m rise in lending over the previous six months, according to the Bank's latest lending statistics.

Although one-off factors such as the Olympics are likely to have played a part, bank lending to UK businesses dropped £1.2bn, while household loans dropped £600m. Loans from banks to other financial bodies such as pension funds also fell by £3.1bn, but analysts at Barclays were more concerned about signs of declining lending in the real economy. "The decline in corporate and mortgage lending marks a disappointing start," said the bank.