LENDING to UK businesses continued to fall in February, dropping by a further net £750 million, Bank of England figures have shown.
But there was a £159m net rise in lending to small and medium-sized enterprises, defined as those with a turnover of less than £25m on their main business account. This net movement takes into account repayments, and includes changes in overdrafts.
Lending to large businesses fell by a net £909m in February.
The net £750m fall in overall lending to non-financial businesses in February was the fifth straight monthly drop. However, the rate of decline fell, with respective net falls of £4.43 billion, £1.66bn, and £891m having been recorded in November, December and January.
Good availability of affordable loans is viewed as crucial to the development of a less unbalanced recovery in the UK. Levels of business investment have proved extremely disappointing in recent years.
There have been signs of a recovery in business investment recently, but this improvement is at a very early stage.
Howard Archer, chief UK economist at consultancy IHS Global Insight, viewed the latest lending figures as disappointing.
But he saw some possible reasons for optimism.
Mr Archer said: "Net lending to non-financial companies disappointingly continued to fall in February, although the rate of decline did at least continue to slow.
"Encouragingly, lending to small and medium-sized companies rose by £159m in February. And it is likely that lending to larger companies is being limited by them using their cash reserves to finance their activities or looking to alternative sources to raise capital."
He added: " Hopefully, the recent slowing fall in overall lending to businesses and the rise in lending to SMEs in February is a sign the trend is turning.
"As demand for credit does pick up, it is vitally important for healthy and more balanced UK growth that all companies who are in decent shape and who do want to borrow - whether it be to lift investment, explore new markets or generally support their operations - can do so, and at a non-punishing interest rate.
"This applies to all companies, whatever their size."
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article