Bank of England concerned about business lending
The Bank of England is growing more and more concerned about the low level of lending available to small and medium-sized businesses in the UK. It is becoming more apparent that despite the UK government's £175 billion quantitative easing program, with many banks taking up the offer of increased liquidity, very little of this is actually being injected into the commercial market. As a consequence, last week's GDP figures showed a disastrous 0.4% reduction in the UK economy.
There is growing concern within the corridors of power that the UK banking sector is "letting down" the UK business arena and holding back the UK economy. Despite various promises from the banking sector to the UK government, so far there has been just a tiny increase in liquidity in the commercial market and indeed many consumers and businesses are being turned down for new lending arrangements.
The longer this particular strategy continues the more problems which will build up for not only UK businesses and UK consumers, but also the UK economy. It is vital that the commercial money market wheels begin to turn and liquidity is filtered through the system to those in need of urgent refinancing. However, with the economy not yet in recovery mode many banks are taking a cautious approach to the situation and holding fire on increasing their own individual liquidity.
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