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Bank lending continues to fall

Despite promises that the UK banking community would increase liquidity across the board in exchange for taxpayer led bailouts, it seems as though bank lending to businesses is under more pressure than ever before. Figures from the Bank of England show that bank lending to non-financial companies fell by a massive £14.7 billion, in the three months to the end of June, pushing more and more businesses to the edge of disaster.

This drop is the largest since records began in 1997 and does not bode well for the immediate future. A more detailed breakdown of the fall in lending shows a reduction of £6.3 billion to the wholesale and retail business, £4.5 billion to UK manufacturers, £2.7 billion to legal and consultancy firms and £2.1 billion to the under pressure construction sector. Not only do these figures show that finance has been in short supply over the last three months but they seem to fly in the face of the UK government's policy of trying to induce extra capital into the money markets.

While associations such as the British Chamber of Commerce and other trade bodies have been very vocal in their criticism of the UK banking sector, so far this has been very much in vain. What can they do next?

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