Business lending continues to fall

Lending to businesses fell again in March, suggesting that Bank of England efforts to kick-start the market have yet to bear fruit.

Figures yesterday showed that lending to non-financial companies shrank by a net £600 million in March. Within that, lending to smaller firms dropped by £100m, erasing the previous month’s gain.

Last week, the central bank and Treasury retooled their Funding for Lending scheme, giving banks greater incentives to lend to small and medium-sized firms which complain they are starved of credit.

IHS Global Insight economist Howard Archer said: “It needs to be borne in mind that low lending levels to companies has reflected weak demand as well as supply factors.”