THE BANK of England’s plan to pump money into banks to raise lending has failed to boost credit, small firms said over the weekend.
The Federation of Small Businesses (FSB) attacked banks for taking £16.5bn from the Funding for Lending Scheme (FLS) but cutting lending by £2bn.
“Demand for finance is at its highest during a recovery as confidence grows,” said the FSB’s John Allan. “We hope non-bank lenders which are now part of the FLS will be less risk averse to bring about a real increase in small business lending.”
The FLS offers cheap funding to banks, as long as they raise lending. The Bank of England has tweaked it to incentivise banks to increase lending to small firms. It is waiting to see if that change has any effect before making further adjustments.