Lending growth hits high
LENDING for home loans and businesses has enjoyed its biggest increase for fi ve years – but there are concerns extra funding is not fi nding its way to small fi rms.
The Bank of England’s quarterly Credit Conditions Survey revealed that banks and building societies have signalled a “signifi cant” rise in secured lending to households and to companies in the past three months of 2012.
The report provided the fi rst evidence that the Bank’s £ 60billion Funding for Lending Scheme launched in August is starting to ease credit conditions and pull down the cost of borrowing.
FLS was a response to concerns that a shortage of loans following the fi nancial crisis was a cause of weakness in the economy and needed to be reversed to kick- start growth.
The Bank’s report stated: “In the three months to midDecember, lenders reported a signifi cant increase in the amount of credit made available to the secured household and corporate sectors, and a slight increase in the availabil- ity of unsecured credit to households. The Funding for Lending Scheme was widely cited as contributing towards the increase in secured and corporate credit availability.
“Lenders expected a further increase in the availability of credit to all sectors over the coming quarter.”
Yet while there was strong growth in the supply of corporate loans, the report indicated lending to small fi rms rose only slightly and demand for credit from small fi rms fell.
Howard Archer, economist at IHS Global Insight said the survey was encouraging.
But he added: “There are signs that smaller companies may not benefi t as much as larger and medium- sized fi rms, which would be disappointing given that it is a lack of available and affordable credit to smaller companies that has been of particular concern.
“The implication is that banks remain very cautious about lending to smaller businesses in the current diffi cult and uncertain environment.” THE Wellcome Trust yesterday signalled a shot in the arm for Britain’s life sciences industry by launching a £ 200million investment arm with the intention to provide long- term backing to start- up companies.
The charitable foundation said the Syncona Partners investment group would support new businesses around the world in the medical devices, therapeutics, diagnostics and information technology sectors. It will provide between £ 1million and £ 20million backing for fi rms, either as a majority investor or as part of a syndicate.
The Trust, which has assets of more than £ 15billion and provides about £ 650million of research grants every year, said a fi ve- strong founding team is in place under Syncona chief executive Martin Murphy.