Business lending expected to drop again

Bank lending to businesses in 2012 is expected drop for a fourth consecutive year, according to a new report.

The Ernst & Young ITEM Club has predicted a 4.6 fall compared with last year, with lending reducing to £429bn. The figure will be the lowest level since 2006.

Carl Astorri, senior economic adviser to the Item club, said government schemes like business secretary Vince Cable’s British Business Bank may “help a lucky few” but he added that small businesses are going to continue to feel the squeeze.

Astorri also warned that as small and medium-sized companies face a funding gap of about £19bn over the coming year, but the business bank’s capacity will be about £10bn.

 

“The figures suggest that the BBB’s lending capacity could be exhausted in less than a year,” he said.

Astorri added: “We expect the business bank will have to compete for projects that are commercially viable, and so we do not think the scheme will have a tangible impact on the economy.”

Source: http://www.insidermedia.com/insider/national/79290-business-lending-expected-drop-again?utm_source=nw_newsletter&utm_medium=deals_article&utm_campaign=nw_news_tracker