Figures show rise in net lending

Figures show rise in net lending

Net lending to companies rose last month for the first time since January in a sign that business confidence is improving as the British economic recovery gathers pace.

Figures from the British Bankers’ Association (BBA) revealed net borrowing by non-financial firms edged £172m higher in June against a £2.7bn net repayment in May.

The BBA said the data, which also showed the number of mortgages approved by banks to home buyers soared to a 17-month high in June, signalled progress in the wider economy.

David Dooks, BBA statistics director, said: “Second quarter gross domestic product is expected to have strengthened and as economic conditions improve the banks are providing the finance to help growth.”

The data fuels hopes that the Bank of England and Treasury’s Funding for Lending Scheme (FLS) is starting to have a positive impact after it was extended in April and tweaked to boost small business lending.

But the BBA added that net lending to businesses continues to fall on an annual basis as large firms are increasingly turning to equity and bond markets for funding, while small firms are preferring to save to pay for expansion.

Separate data from the BBA showing lending by postcode for the first time revealed small firms across nearly all regions of Britain saved more than they borrowed last year.

Small and medium sized businesses (SME) in around three quarters of the 120 postcode areas had higher net deposits than loans at the end of 2012.

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