Lending to businesses has suffered its biggest drop since April 2011, raising concerns about the strength of the economy and the impact of schemes intended to increase banks' appetite to lend.
Lending to non-financial companies fell by £4.7bn in November, compared with a monthly average decrease of £1bn over the previous six months.
But it was caused by a drop in loans to big businesses and the data, from the Bank of England, showed that small business lending rose for the first time in five months.
"Whatever the causes behind the marked drop in business lending in November, the data suggests that banks have yet to become markedly more prepared to lend to businesses amid the improved economic situation and outlook," said Howard Archer, chief European and UK economist at IHS Global Insight.
The Funding for Lending scheme (FLS) was refocused on business lending in November in an attempt by the Bank of England to take some of the heat out of the mortgage market, where lending has recovered from the 2008 banking crisis.
Some 70,758 mortgages were approved in November, up from 68,029 the previous month and the greatest amount since January 2008.
While the FLS is being refocused from the mortgage market, the government's Help to Buy scheme – which helps customers with only small deposits for their homes – is continuing and David Cameron on Thursday insisted the policy was not feeding a housing bubble.
The prime minister said that the house price growth was focused in London and south-east, although the latest house price survey from Nationwide building society showed that Manchester beat the capital to have the strongest house price growth in 2013.
Samuel Tombs, UK economist at Capital Economics, said the Help to Buy mortgage guarantee scheme could be fuelling the mortgage approval figures and that the data followed by the Bank of England's monetary policy committee was not growing.
"The MPC's preferred measure of overall bank lending merely held steady in November. While lending to households increased a fraction, lending to companies fell by 0.5% on the previous month," Tombs said.
David Tinsley, an economist at BNP Paribas, said Help to Buy and the FLS had been successful in stimulating the housing market and were also helping to fuel the construction industry, reflected in the PMI data released on Friday.
"A recovery in residential housebuilding is a key driver in the rise in the PMI, with the index having risen from 47.5 in January 2013 to stand at 63.7 in December. But that is not the only story. Civil engineering has also seen a solid rise, and work on commercial construction in December showed the latest rise since August 2007," said Tinsley.
"Overall the picture from the data remains consistent with a UK recovery that has been fairly household-led. The housing market is recovery strongly and this has seen some useful rise in construction activity too.
And this construction uptick is spreading beyond just housing, which is encouraging. But for now there remains relatively little sign of a pick-up in broader corporate lending."
theguardian.com
Lending to non-financial companies fell by £4.7bn in November, compared with a monthly average decrease of £1bn over the previous six months.
But it was caused by a drop in loans to big businesses and the data, from the Bank of England, showed that small business lending rose for the first time in five months.
"Whatever the causes behind the marked drop in business lending in November, the data suggests that banks have yet to become markedly more prepared to lend to businesses amid the improved economic situation and outlook," said Howard Archer, chief European and UK economist at IHS Global Insight.
The Funding for Lending scheme (FLS) was refocused on business lending in November in an attempt by the Bank of England to take some of the heat out of the mortgage market, where lending has recovered from the 2008 banking crisis.
Some 70,758 mortgages were approved in November, up from 68,029 the previous month and the greatest amount since January 2008.
While the FLS is being refocused from the mortgage market, the government's Help to Buy scheme – which helps customers with only small deposits for their homes – is continuing and David Cameron on Thursday insisted the policy was not feeding a housing bubble.
The prime minister said that the house price growth was focused in London and south-east, although the latest house price survey from Nationwide building society showed that Manchester beat the capital to have the strongest house price growth in 2013.
Samuel Tombs, UK economist at Capital Economics, said the Help to Buy mortgage guarantee scheme could be fuelling the mortgage approval figures and that the data followed by the Bank of England's monetary policy committee was not growing.
"The MPC's preferred measure of overall bank lending merely held steady in November. While lending to households increased a fraction, lending to companies fell by 0.5% on the previous month," Tombs said.
David Tinsley, an economist at BNP Paribas, said Help to Buy and the FLS had been successful in stimulating the housing market and were also helping to fuel the construction industry, reflected in the PMI data released on Friday.
"A recovery in residential housebuilding is a key driver in the rise in the PMI, with the index having risen from 47.5 in January 2013 to stand at 63.7 in December. But that is not the only story. Civil engineering has also seen a solid rise, and work on commercial construction in December showed the latest rise since August 2007," said Tinsley.
"Overall the picture from the data remains consistent with a UK recovery that has been fairly household-led. The housing market is recovery strongly and this has seen some useful rise in construction activity too.
And this construction uptick is spreading beyond just housing, which is encouraging. But for now there remains relatively little sign of a pick-up in broader corporate lending."
theguardian.com
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