LENDING to UK businesses saw the biggest decline in almost two years in July, the Bank of England has reported.
Net lending to UK firms slid by £4.2 billion over the month, driven by a £2 billion net repayment by businesses to banks.
The significant amount of repayment saw the annual growth rate of bank lending to UK businesses fall to 3 per cent, down from 4.4 per cent in June.
Analysts have suggested the slump in borrowing could be another sign that firms are resisting investment which would need a loan and are hunkering down until there is greater clarity over Brexit.
The decline was most significant among large businesses, where the growth rate of borrowing fell to 4.2 per cent.
Growth of borrowing by small and medium-sized firms (SMEs) was unchanged at 0.8 per cent for the month.
Michael Biemann, chief executive of Selina Finance, said: “SME borrowing rates remained static at 0.8 per cent, which once again underlines the disconnect between the average UK business and the high street.
“These days, high street banks want businesses to jump through all kinds of hoops to secure finance, and so it’s no surprise the number of SMEs turning to alternative sources is on the increase.”
Meanwhile, the new Bank of England figures also revealed that British lenders approved the greatest number of mortgages for two years in July, appearing to highlight greater stability in the housing market following a Brexit slowdown.
The central bank said lenders approved 67,306 mortgages last month, up from 66,506 in June.
The UK housing market has been downbeat since the EU referendum in 2016 but has shown tentative improvements in recent months.
However, earlier on Friday, the latest Nationwide housing survey revealed that annual house price growth ran below 1 per cent for the ninth month in a row in August as consumer confidence remained low.
Source: Irish News