LENDING by banks to small and medium sized enterprises fell by £1 billion net of repayments in December, official figures have shown.

The numbers produced by the Bank of England suggest conditions in credit markets may have got tougher for SMEs in December. The fall more than offset a £300m increase in net lending to SMEs in November, which was only the third rise in 2014.

Lending to all firms fell by £3.8bn in December, compared with a £80m drop in November.

The figures may refocus attention on the question of whether big banks are doing enough to support firms. Champions of small business have complained that sector players find affordable credit hard to come by.

Giants like Royal Bank of Scotland and Lloyds Banking Group owned Bank of Scotland insist they are keen to lend to suitable businesses.

But lending data suggest big banks are continuing to take large amounts of money out of the corporate economy overall.

The British Bankers Association (BBA) found lending by the major UK banks to companies fell by £2.4 billion net of repayments in December, for the second successive month.

However, Howard Archer, UK economist at IHS Global Insight, said the underlying situation looks less worrying than the Bank of England's December net lending figures suggest.

He noted the BBA had reported that outstanding lending had been falling as larger firms have used the bond market rather than borrowing from banks. Outside real estate, businesses are generally expanding their lending.

Mr Archer said the Bank of England's regional agents had provided indications credit conditions had improved for smaller companies, although they are still generally tougher than for larger firms.

The BBA found borrowing by all non-financial companies contracted by £15.7bn in 2014, compared with a fall of £11.6bn in 2013.