UK lending to businesses drops again in the first quarter of 2013

4 June 2013

Lending from banks in the UK has continued to fall despite the government's best efforts to reverse the trend using its Funding for Lending Scheme.

New figures from the Bank of England revealed net lending dropped by £300 million ($459 million) in the first quarter of 2013.

Loans to businesses were down, although lending to individuals increased slightly.

However, the figures do not spell complete disaster, as they were a large improvement on the last quarter of 2012, when bank lending dropped by £2.4 billion.

The central bank also said that financial institutions taking part in Funding for Lending Scheme would be making more loans available later in the year.

Last August the government launched its Funding for Lending Scheme, in an attempt to boost lending and create growth within the economy.

Under the initiative, banks and building societies are allowed to borrow money at a cheaper rate from the Bank of England, on the provision that they loan that money to individuals or businesses.

By Tony Aynsley

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