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Funding for Lending figures climb to new high

 

A government scheme aimed at boosting finance to businesses achieved its highest quarterly lending results in the third quarter of this year, new data reveals.

 

The Bank of England said banks and building societies had borrowed £5.8 billion under the Funding for Lending scheme (FLS) during the three months to the end of September. This was more than three times the amount recorded in the previous quarter.

 

Launched in July 2012, the FLS is designed to boost lending to homebuyers and small businesses by providing banks with cheap, state-backed funding.

 

Last week the Bank of England and the Treasury announced that the scheme will be changed to exclude individuals following an increase in mortgage lending and the upturn in the housing market.

 

The scheme will, however, continue to provide support to small and medium-sized enterprises (SMEs) during 2014.

 

Commenting on the latest FLS statistics, Paul Fisher, executive director for markets at the Bank of England, said: ‘An economic recovery has taken hold. These data show that a significant improvement in credit conditions, aided by the FLS, is now feeding through to lending.

 

‘But credit supply to businesses remains relatively subdued, especially to SMEs. The refocus of the FLS is designed to continue to support the recovery, where it is needed.’

 

The Confederation of British Industry (CBI) welcomed the data but called for more action to boost lending to SMEs.

 

‘Despite overall FLS lending substantially increasing, Bank of England data shows that net lending to SMEs continues to fall, so the recent move recalibrating the scheme towards business lending is welcome,’ said Matthew Fell, the CBI's director for competitive markets.