BoE Reveals Increase In Business Lending

Tue, 01 Mar 2011

Banks increased lending to UK businesses in January, new data from the Bank of England has revealed.

The figures showed that loans to private, non-financial corporations grew by £1.1 billion last month, while over the twelve weeks to end of January lending rose at an annualised rate of 2.6 per cent.

However, the levels of bad business debts written off by lenders increased to the £2.5 billion during the final quarter of 2010 – the largest quarterly write-off figure on record. Business write-offs for the whole year totalled £7 billion, according to the BoE.

Lending to UK firms is likely to continue growing over the coming months after the country’s main banks earlier this month reached an agreement with the government over business lending commitments.

Barclays, Lloyds, HSBC, Royal Bank of Scotland and Santander agreed a deal, dubbed Project Merlin, to lend a total of £190bn over the next 12 months to British-based businesses.

Small firms in areas of the country worst hit by the spending cuts will also benefit from an additional £1.3 billion bank loan fund.
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