LENDING by the major UK banks to businesses fell sharply again in November, the latest figures have revealed.
The British Bankers' Association said yesterday that borrowing by non-financial companies had dropped by a net £2.4 billion in November. This was significantly steeper than the average monthly fall of about £900m in the prior six months.
Lending by the major UK banks to non-financial companies had declined by £2bn in October, according to the BBA figures.
The BBA continued to highlight the impact on the lending figures of moves by real estate companies to cut their bank borrowing.
And it highlighted "positive and sustained borrowing growth" in the manufacturing, wholesale and retail sectors.
However, it noted that, excluding the real estate sector, borrowing by non-financial companies in November was down by 4.2 per cent on the same month of last year.
Howard Archer, chief UK economist at consultancy IHS Global Insight, said: "While disappointing on the face of it, the overall fall in bank lending to companies is substantially due to reduced borrowing by the real estate sector."
He added: "Overall, it does appear that underlying bank lending to businesses is improving. The BBA itself highlighted positive and sustained borrowing growth in the manufacturing, wholesale and retail sectors. In addition, the Bank of England's regional agents reported in their December survey of business conditions that corporate credit conditions had improved further, with signs of an increase in lenders' risk appetite."
Mr Archer also cited "very welcome indications" from the Bank's regional agents that credit conditions were improving for smaller companies.
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