Business lending slides by record amount

Bank lending to businesses fell by £8.4 billion in July, new figures have revealed.

According to the Bank of England, loans to private non-financial corporations dropped by 1.7 per cent in July.

This represents the biggest single decline in business lending in 12 years.

The Bank of England’s decision to prime the economy with an injection of £175 billion of quantitative easing seems so far not to have prompted the extra lending that is needed to kick-start business growth.

In the second quarter of the year, there was a rise of £365 million in corporate debt that was written-off.

The data suggests that while bank losses on toxic assets may be ending, recession-driven losses on conventional loans are just beginning to hit.

The banks have argued that the fall in lending owes much to the number of businesses that are choosing to clear debts in order to stabilise their balance sheets.