Lending to British businesses has been slashed by almost £100bn over the last four years according to figures released yesterday by the Bank of England.
According to a report in the Mail Online, experts accused lenders of ‘sucking the lifeblood out of business’, which is crippling their ability to invest and create new jobs.
Bank of England figures showed the amount banks have earned but then refused to lend reached £96.5bn between November 2008 and March 2012.
Lord Oakeshott, a Lib Dem peer who resigned in February last year over Project Merlin – the Government’s failed attempt to get banks to lend – said the consequences of the ruthless behaviour were dire.
“There is no way our economy can grow when the banks keep sucking the lifeblood out of business,” he said. “Around £11 billion of negative net business lending over the past three months makes it a £100 billion bank attack on business, jobs and growth over the past three-and-a-half years.”
The figures emerged just days after the Prime Minister insisted solving the small business lending crisis was one of the most urgent problems the Government needed to address.
Brian Capon, assistant director of the British Bankers’ Association, said: “Banks are continuing to lend to viable businesses that have a sound business plan and can show that they are able to meet existing and new financial commitments.”
Earlier this week Lloyds Bank revealed that unlike some of other banks, its net lending to small firms is growing, up 4% over the past year.
According to research revealed in the Independent, small companies face a £191bn lending gap of finance over the next five years if they are to grow. In addition, The Federation of Small Businesses claims that 40% of all small companies have had requests for finance turned down last year while often being charged 11% or higher on their loans and overdrafts.
‘Only 2% of the UK banks’ balance sheets is lent to SMEs,’ wrote Independent Journalist Margareta Pagano. ‘Just consider that fact: it’s extraordinary. While attempts to ease credit have been worthy – Project Merlin, the National Loan Guarantee Scheme and QE – they have failed.’