LONDON Aug 4 British bank lending to the
corporate sector lagged lending in other Group of Seven leading
economies last year, despite government attempts to boost the
availability of credit, a survey showed on Monday.
The study, compiled by accountancy group UHY Hacker Young,
showed that in 2013 private sector credit volumes in Britain
fell by 2.2 percent, taking inflation into account, while
lending across the G7 as a whole increased by 0.1 percent.
UHY Hack Young attributed the weak lending in rich economies
partly to rules that seek to prevent a repeat of the financial
crisis by requiring banks to hold more capital but which have
raised the cost of credit.
Initiatives to encourage corporate lending such as the
Funding For Lending Scheme (FLS) launched by the government and
the Bank of England in 2012 have had limited impact on small
business lending, said UHY Hacker Young Partner Laurence Sacker.
"While things are slowly starting to improve in the UK, it
is not enough to kick-start the growth in capital investment by
businesses that we need to see," Sacker said in a statement.
"The government and Bank of England need to consider what
else they can do to lower the cost of loans to small and
medium-sized enterprises," which find it hard to tap bond
markets for borrowing, he said.
Net lending by banks taking part in the FLS scheme fell by
2.7 billion pounds in the first quarter of this year.
The BoE said last week that overall lending to non-financial
businesses fell by 3.4 billion pounds in June.
Top British policymakers say the banking sector needs to
resume lending to businesses to help spur a long-awaited pick-up
in productivity and put the country's economic recovery on a
(Reporting by Tess Little; Editing by William Schomberg and