LONDON (Reuters) - Lending to businesses rose for the first time in nine months in November, data from the Bank of England showed on Friday, but both mortgage lending and approvals fell sharply, and overall credit conditions remain tight.
The BoE’s Trends in Lending report showed the net monthly flow of lending to businesses by British banks picked up to 1.3 billion pounds in November after a decline of 2.8 billion pounds in October.
That helped slow the decline in lending on the year to 5.1 percent from 5.5 percent. The three-month annualised growth rate improved to show a fall of 4.1 percent in November from a 5.2 percent drop in October.
The figures indicate that credit conditions for companies are slowly improving, but it is unclear whether this will be enough to help support a private-sector led economic recovery as government spending cuts kick in.
The BoE injected 200 billion pounds of cash into the economy between 2009 and 2010 with the hope of boosting the flow of credit, but there has been little evidence that funds have been getting through to small businesses.
The BoE’s report showed that net lending to firms was likely to have remained weak in December, consumer credit growth was low, and Britain’s housing market remains in the doldrums.
The number of loans approved for home purchase, meanwhile, fell to 40,000 in December from 45,000 in November, the lowest since March 2009 and suggesting a further weakening in house prices is on the cards.
Net mortgage lending slowed to 0.8 billion pounds from 1.4 billion in November, the lowest since the current series began in January 2009.