Credit blow greets new man Mark Carney as small firms suffer
Monday 01 July 2013
A fresh credit blow for Britain’s small businesses today underlined the stiff task ahead for new Bank of England Governor Mark Carney on his first day in the job.
The Bank’s latest figures showed loans and overdrafts to small businesses shrinking by £452 million in May as Carney gets down to work in Threadneedle Street. The latest disappointment means lending to smaller firms — defined by a turnover of less than £25 million — has fallen in all but two months since the Bank began collecting the figures two years ago.
It also comes despite changes to the Funding for Lending initiative in April, designed to incentivise banks to lend to smaller companies. For the rest of this year they can draw down £10 in cheap funding under the scheme for every £1 in net lending advanced to SMEs, and £5 for every £1 in 2014.
Smaller businesses also repaid £3.7 billion in loans in May, higher than the average, the figures showed.
“At best, it appears that FLS may have stopped lending to businesses from falling more than it has,” IHS Global Insight’s Howard Archer said. The latest FLS figures showed a £300 million slide in lending in the quarter to March, although some banks such as Royal Bank of Scotland are dragging the figures down as they pull back from areas like commercial property.
Lending to business overall declined by a further £1.3 billion — although this was a smaller fall than the average of the past six months, the Bank added. Funding for Lending has had far more impact on the mortgage market, where home loans jumped 7% in April to 58,242, the most since December 2009. The average cost of new mortgage loans meanwhile dropped to a new record low of 3.27%.
There was better news for Carney from manufacturers as UK firms managed their third successive month of expansion, lifting prospects for the wider economy in the current quarter. The Chartered Institute of Purchasing & Supply’s latest healthcheck showed the fastest pace of growth for more than two years as “sector begins to work up a head of steam,” according to chief executive David Noble.
The new Governor chairs his first meeting of the Bank’s Monetary Policy Committee on Wednesday, when rate-setters are expected to make no changes to their £375 billion rates programme.
Barclays chief economist Simon Hayes said: “Although activity is not rising especially rapidly, momentum appears sufficiently positive to suggest that a recovery is indeed in train, and the case for further stimulus is diminishing.”
- 1 Replica Back to the Future Hoverboard released
- 2 Katie Hopkins attacked me on Twitter — so I reported her to the police for inciting racial hatred
- 3 Brixton squat flats now costing up to £3k per month show how out of control rent is in London
- 4 Gamers confess the worst things they've done in The Sims
Costa Concordia: Shipment of Mob drugs was hidden aboard cruise liner when it hit rocks off Italian coast, investigators say
Germanwings crash: Captain of doomed plane was only 'on board because he changed job to spend more time with his children'
Iran nuclear talks: Prospect of deal with Iran pushes Saudi Arabia and Israel into an unlikely alliance
A new (old) cure for MRSA? Revolting recipe from the Dark Ages may be key to defeat infection
Jeremy Clarkson 'could be given minder' ahead of a potential Top Gear return
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
Street preacher quoting from the Bible fined for calling homosexuality an 'abomination'
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Woman filmed launching racist tirade against men on the Tube for speaking in 'own lingo'
The West has it totally wrong on Lee Kuan Yew
David Cameron calls Labour 'hopeless, sneering socialists' while announcing 7-day NHS plans
iJobs Money & Business
£30,000 Annual: Sheridan Maine: A fantastic opportunity has arisen for a perso...
£11 - £13 Hourly Rate: Richard Bishop: Are you looking for a purchase ledger r...
£16000 - £18500 per annum: Recruitment Genius: This leading provider of financ...
£15 - £17 Hourly Rate: George Parlour: Do you have experience in media billing...