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UK lending predicted to rise in 2013

The rate of lending from banks to businesses in the UK will rise for the first time in four years in 2013, according to a prediction from the Ernst & Young Item Club.

In its financial services outlook the forecasting group estimates lending will rise by three per cent to £440 billion this year.

The reason for the rise has been attributed to the increased availability of wholesale funding by the commercial banks and a reduction in bad debts.

According to the report, the government's Funding for Lending Scheme (FLS) has also helped make a difference in the amount of businesses obtaining funding.

The FLS was devised by the Bank of England and allows banks and building societies to lend at a cheaper rate on the condition they pass on the savings to customers with cheaper loans and mortgages.

In 2012 the rate of lending fell by five per cent.

By Gary Cooper