Tight credit conditions kept lending subdued last month
BRITISH firms and households still face tight credit conditions despite an overall improvement in economic activity, the Bank of England’s Trends in Lending report revealed yesterday.
Net lending to businesses fell for the third consecutive month in May and by £2.3bn, worse than April’s £1.1bn. But the annual decline eased to 8.1 per cent from 8.5 per cent.
Meanwhile, mortgage approvals slipped back to 48,000 in June from 51,000 in May, which analysts said was symptomatic of muted activity in the UK housing market.
However, consumers are starting to take on more borrowing – net consumer credit rose by £0.3bn in May after £0.1bn of repayments in April. However, this is still a historic lows.
In a separate report, Bank of England data showed that broad money supply (M4) was flat on the month in June but the annual growth rate picked up to three per cent from 2.7 per cent in May.
M4 lending excluding the effects of securitisations fell by 0.1 per cent last month following drops in both April and May. However the annual growth rate picked up slightly to 1.3 per cent from May’s record low of 1.2 per cent.