Credit blow greets new man Mark Carney as small firms suffer

 

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.”

PA

News
people

Top Gear presenter is no stranger to foot-in-mouth controversy

Arts and Entertainment
Imelda Staunton as Dolores Umbridge in the Harry Potter films
books

New essay by JK Rowling went live on pottermore site this morning

Arts and Entertainment
Charlie Sheen said he would
tv

Charlie Sheen could be set to revive his role as a hedonistic womaniser

Life and Style
Jamie Oliver’s version of Jollof rice led thousands of people to post angry comments on his website
food + drink
PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultants

£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

Finance Assistant - Part time - 9 month FTC

£20000 - £23250 Per Annum pro rata: Clearwater People Solutions Ltd: Pro rata ...

Marketing Manager

£40 - 48k + Benefits: Guru Careers: We are seeking a Marketing Manager to join...

Market Risk Manager - Investment Banking - Mandarin Speaker

£45,000 - £65,000: Saxton Leigh: Our client is a well-known APAC Corporate and...

Day In a Page

The drugs revolution starts now as MPs agree its high time for change

The drugs revolution starts now as MPs agree its high time for change

Commons debate highlights growing cross-party consensus on softening UK drugs legislation, unchanged for 43 years
The camera is turned on tabloid editors in Richard Peppiatt's 'One Rogue Reporter'

Gotcha! The camera is turned on tabloid editors

Hugh Grant says Richard Peppiatt's 'One Rogue Reporter' documentary will highlight issues raised by Leveson
Fall of the Berlin Wall: It was thanks to Mikhail Gorbachev that this symbol of division fell

Fall of the Berlin Wall

It was thanks to Gorbachev that this symbol of division fell
Halloween 2014: What makes Ouija boards, demon dolls, and evil clowns so frightening?

What makes ouija boards and demon dolls scary?

Ouija boards, demon dolls, evil children and clowns are all classic tropes of horror, and this year’s Halloween releases feature them all. What makes them so frightening, decade after decade?
A safari in modern Britain: Rose Rouse reveals how her four-year tour of Harlesden taught her as much about the UK as it did about NW10

Rose Rouse's safari in modern Britain

Rouse decided to walk and talk with as many different people as possible in her neighbourhood of Harlesden and her experiences have been published in a new book
Welcome to my world of no smell and odd tastes: How a bike accident left one woman living with unwanted food mash-ups

'My world of no smell and odd tastes'

A head injury from a bicycle accident had the surprising effect of robbing Nell Frizzell of two of her senses

Matt Parker is proud of his square roots

The "stand-up mathematician" is using comedy nights to preach maths to big audiences
Paul Scholes column: Beating Manchester City is vital part of life at Manchester United. This is first major test for Luke Shaw, Angel Di Maria and Radamel Falcao – it’s not a game to lose

Paul Scholes column

Beating City is vital part of life at United. This is first major test for Shaw, Di Maria and Falcao – it’s not a game to lose
Frank Warren: Call me an old git, but I just can't see that there's a place for women’s boxing

Frank Warren column

Call me an old git, but I just can't see that there's a place for women’s boxing
Adrian Heath interview: Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room

Adrian Heath's American dream...

Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room
Simon Hart: Manchester City will rise again but they need to change their attitude

Manchester City will rise again but they need to change their attitude

Manuel Pellegrini’s side are too good to fail and derby allows them to start again, says Simon Hart
Isis in Syria: A general reveals the lack of communication with the US - and his country's awkward relationship with their allies-by-default

A Syrian general speaks

A senior officer of Bashar al-Assad’s regime talks to Robert Fisk about his army’s brutal struggle with Isis, in a dirty war whose challenges include widespread atrocities
‘A bit of a shock...’ Cambridge economist with Glasgow roots becomes Zambia’s acting President

‘A bit of a shock...’ Economist with Glasgow roots becomes Zambia’s acting President

Guy Scott's predecessor, Michael Sata, died in a London hospital this week after a lengthy illness
Fall of the Berlin Wall: History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War

Fall of the Berlin Wall

History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War
How to turn your mobile phone into easy money

Turn your mobile phone into easy money

There are 90 million unused mobiles in the UK, which would be worth £7bn if we cashed them in, says David Crookes