Bank lending slumps to record low

Lending to companies has fallen to its lowest level in nine years, new figures reveal.

The Bank of England’s quarterly Trends in Lending report found that business borrowing fell by £5.4 billion in April, marking the largest monthly drop in lending since June 2000.

With the major high street banks confirming that lending also remained ‘very weak’ in May, experts are now warning that the apparent lack of credit could jeopardise Britain’s hopes of a rapid economic recovery.

Meanwhile, firms seeking to renew or extend bank credit facilities are incurring higher fees and wider spreads on their borrowing, the report stated.

‘Lenders have continued to report subdued demand for new loans, which they partly attribute to weak investment intentions,’ the Bank said.

‘To some extent companies may have reduced their investment plans because credit has become more expensive or harder to obtain.’