Lending in the UK plunges
Recent figures from the Bank of England show that not only are mortgages out of the reach of many people in the UK but loans to small businesses are now worse than they were six months old. Indeed, mortgage loans are at a 10 year low which does not bode well for the UK property sector which is already currently struggling to survive.
Despite the billions upon billions of pounds pumped into the UK economy, via various fiscal stimulus programs, it seems that the vast majority of banks in the UK are more than happy to maintain their own liquidity while reducing their risk. Until we see a major change in the strategy of UK banks it is nearly possible to see a recovery in the UK economy as businesses and consumers are literally living on a shoestring.
As the situation gets worse, as many expect, liquidity in the loans market will also suffer and we could move towards a situation where we see a self fulfilling prophecy of economic troubles, liquidity problems in the money markets and businesses and consumers falling into the financial abyss. Quite what the UK government can do to change this particular strategy taken on by many banks remains to be seen.
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