Stephen Green, the chairman of the British Bankers Association and HSBC, has this week written to George Osborne outlining the creation of a new task force to examine the lack of lending to UK small businesses. The chief executives of Barclays, HSBC, Lloyds bank, Santander, Royal Bank of Scotland and Standard Chartered will play a major role in the steering group as complaints about a lack of funding for small businesses in the UK increased by 120% over the last year.
The very fact that Lloyds bank has bounced back from a significant loss in the first six months of 2009 to a profit of £1.6 billion during the first six months of 2010 has not gone unnoticed in the UK financial press. While the company was pretty keen to confirm that £24 billion in loans has been granted to the UK business arena, further investigation of the figures shows that a similar amount was repaid by borrowers over the same period. So ultimately, despite the fact that new business approaching £24 billion was written during the first six months of 2010, lending is flat at Lloyds bank!
Even before the UK banking sector reporting season began today the UK government was making threatening noises with regards to a potential increase in banking taxes and further regulations regarding remuneration and bonuses. Yet again it is the UK banking sector which has been demonised by the authorities but can we really blame UK banks for the reduced liquidity in the money markets?
Today saw the beginning of the bank reporting season with the top five banks in the UK expected to have made profits in the first half of 2010 in the region of £8 billion. However, there is growing concern about liquidity levels in the small business arena and the problems this will create in the medium to longer term and the impact this will have on the UK economic outlook.
As we begin a raft of results from UK banking institutions all eyes are on the level of lending to the UK small business arena as opposed to profitability, which is already expected to be in the billions of pounds. While historically the UK banking sector has been very supportive of the small business arena, over the last two years we have seen a massive reduction in liquidity in this particular market which is causing significant financial hardship across the UK. So will UK banks increase lending to small businesses?
Vince Cable, the new business secretary, has today issued a statement suggesting that those banks in the UK who do not increase their lending will feel the wrath of the UK government's new tax regime. Despite the fact that lending in the UK to consumers and businesses is still relatively low Vince Cable does not believe there is a long-term problem. So can the UK government finally come to the aid of consumers and businesses?
The UK government has today stepped into the limelight with regards to bank lending and warned the UK banking arena that lending to small, medium and large sized businesses must improve. This comes at a time when the UK government is looking towards the small business arena to take up any slack left by reductions in the public sector budget, something this has not been happening of late. So will the UK government be able to influence bank lending in the UK?
Despite the fact that on the surface it would appear that the UK economy is much stronger today than it was towards the latter part of 2009, we are still seeing more and more people in the UK suffering financial hardship. Credit card debits are mounting up, loan payments are being missed and despite the fact that mortgage interest rates are relatively low, many people are struggling to cover their monthly payments. Are consolidation loans an option for some people?
As more and more UK small businesses feel the pinch of the economic downturn there is growing concern about the role of UK banks. Despite promises to the contrary only weeks ago it seems that liquidity in the small business arena is still relatively low and causing major problems. So why is liquidity so scarce in the UK banking arena?
It has been revealed that up to £12 billion will this year be borrowed by UK holidaymakers to cover the cost of an overseas holiday. This comes despite the fact that personal debts in the UK have reached levels the likes of which we have never seen before and more and more people are forecast to stare bankruptcy in the face over the next 12 months. But why are UK consumers willing to increase their debts purely for the sake of a holiday?
