LONDON (Reuters) - 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 sounder footing.
Reporting by Tess Little; Editing by William Schomberg and Gareth Jones