Funding for Lending scheme failing as lending falls by £3.8 billion in May

New data published this week shows that banks are still not lending to British businesses, despite the government's much trumpeted Funding for Lending scheme.

Lending

New data published this week shows that banks are still not lending to British businesses, despite the government’s much trumpeted Funding for Lending scheme.

Figures published yesterday by the British Bankers Association show that lending fell in more than 80 per cent of the country’s 120 postcode areas between 2011 and 2012, while lending figures published by the Bank of England this week show that lending to UK businesses fell by £3.8 billion in May 2013 (Table 1.A, p.4).

Last month Vince Cable admitted that the government’s Funding for Lending scheme had had only “modest effects so far” and that it had not delivered “as much as we’d hoped”.

“Most of the lending is going into the mortgage market, and up to a point that is fine providing we don’t trigger another housing bubble. It is business lending that we are primarily concerned about and it has had modest effects so far. I mean, I did go to a new challenge bank, Aldermore, last week, which is taking advantage of the Funding for Lending Scheme. So it is having some impact, but it’s not as much as we’d hoped.” – Vince Cable, The World At One, BBC Radio 4, 3 June 2013.

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