Is Britain facing a new credit crunch?

According to the Bank of England, business lending could be set for the sharpest decline since the financial crisis. That bodes ill for UK plc, writes James Moore

Results from the last quarter suggest both banks and businesses are battening down the hatches
Results from the last quarter suggest both banks and businesses are battening down the hatches

On top of all its other economic problems, is Britain facing a corporate credit crunch? The Bank of England’s credit conditions survey shows that business lending remained more or less flat as a pancake for the three long years after the EU referendum. That’s changed and not in a good way.

The latest update shows a decline in the third quarter of 2019 which is expected to accelerate during the current quarter. If lending performs in line with expectations for the final three months of 2019, it will show the sharpest decline since the run up to the financial crisis.

That statement demands a little context. In the absence of an economic earthquake, the decline won’t come close to the slump the Bank’s graphs show occurred in the latter part of 2007 when the UK was in the midst of the global credit crunch.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in