LONDON (Reuters) - Lending to UK businesses fell for a fourth consecutive month in June and mortgage approvals hit their lowest in more than a year in July, data from the Bank of England showed on Thursday.
Separate figures from the central bank showed broad money supply growth slowed to its weakest annual rate on record in July.
The Bank’s Trends in Lending report showed the net monthly flow of lending to UK businesses contracted by 3.5 billion pounds in June, after May’s 2.2 billion pound drop. The annual rate of decline held steady at 8.1 percent.
Mortgage approvals for house purchase made by Britain’s six biggest lenders — Santander, Barclays, HSBC, Lloyds, Nationwide and RBS — dropped to 47,000 in July from 48,000 in June, its lowest since May 2009.
“The stock of lending to all the main sectors of the economy contracted in the second quarter,” the BoE said in its report.
“Net lending by the major UK lenders remained weak in July.”
It noted that smaller companies were having a harder time getting credit than big organisations.
The figures highlight the headwinds facing Britain’s economic recovery this year. Bank policymakers have cited tight credit conditions as a key risk to growth alongside the government’s ambitious austerity programme.
Another concern for the central bank may be the slow pace of money supply growth. M4 broad money expanded by 0.4 percent on the month in July, up from 0.1 percent growth in June, provisional data showed. However the annual rate fell to 2.3 percent — its lowest since monthly records began in 1983.
Reporting by Christina Fincher and Matt Falloon