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Lending under Government scheme increased in Q2

Net lending to businesses and households under a flagship Government scheme increased by £1.6 billion in the second quarter of 2013, latest figures from the Bank of England have shown.

The Funding for Lending Scheme (FLS), launched in July 2012, allows banks and building societies to borrow cheaply from the Government so that they can pass on cheaper finance to businesses and individuals.

The Q2 2013 figure was a slight improvement on previous quarters but there were differences between lending to individuals and businesses. Lending to individuals - mostly via mortgages - increased slightly while FLS borrowing by large businesses 'remained weak' and lending to SMEs fell.

Dr Adam Marshall, director of policy at the British Chambers of Commerce, said the net rise in lending would boost confidence but warned that "new businesses are still struggling to find the funds they need to fulfil their growth potential."

John Allan, national chairman of the Federation of Small Businesses (FSB), said a rise in lending and a fall in the price of finance was good news for small firms. He continued: "The next step is for banks to make this cheaper finance available to more small businesses. We have been hearing from FSB members that obtaining finance remains an issue, so hopefully today's news will continue to shift momentum on lending in the right direction."

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