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Lending to UK business weakest on record in July -BoE
inspector_monkfish
Posts: 9,276 Forumite
09:30 18Sep09 NET LENDING FLOW TO UK BUSINESS -15.5 BLN STG IN JULY VS -3.6 BLN STG IN JUN, WEAKEST IN SERIES -BOE
09:30 18Sep09 STOCK OF LENDING BY MAJOR UK LENDERS TO BUSINESSES FELL FURTHER IN AUG- BOE TRENDS IN LENDING REPORT
09:30 18Sep09 LENDING TO UK BUSINESSES DOWN 3.3 PCT Y/Y IN JULY VS ANNUAL FALL OF 0.5 PCT IN JUNE- BOE REPORT
09:30 18Sep09 MAJOR UK LENDERS APPROVED 57,000 MORTGAGES IN AUG, UP FROM 53,000 IN JULY - BOE
09:30 18Sep09 GROSS MORTGAGE LENDING BY MAJOR UK LENDERS 9.7 BLN STG IN AUG VS 9.4 BLN STG IN JULY -BOE
09:30 18Sep09-Lending to UK business weakest on record in July -BoE
LONDON, Sept 18 - Net lending to British firms fell in July by the biggest amount since records began in 1998, the Bank of England said on Friday, a further sign policymakers' huge efforts to get credit flowing are not feeding through yet.
However, mortgage approvals by major UK lenders rose in August for the seventh consecutive month to 57,000 from 53,000 in July, the BoE's monthly Trends in Lending report showed.
The net flow of lending to UK businesses fell 15.5 billion pounds in July after a 3.6 billion pounds fall in June.
"Major UK lenders indicated that their stock of lending to businesses fell further in August," the BoE said, adding that the weakness in July was across all sectors of the economy.
On a year ago, lending to companies was down 3.3 percent in July and the BoE said the outstanding stock of loans to UK businesses by UK resident foreign lenders had contracted very sharply in recent months.
"That is consistent with reports from market contacts of an increased bias towards domestic lending among banks internationally," the BoE said.
The poor business lending figures are likely to worry policymakers given extensive and costly measures aimed at improving the flow of finance to recession-hit companies.
The BoE, which has slashed interest rates to a record low of 0.5 percent and started buying assets to boost activity this year, has said it will take some time for its 175 billion pound quantitative easing efforts to feed through.
Separately, the BoE published provisional figures for broad money supply growth -- an indicator back in vogue as a way to gauge if QE is working.
In August, M4 broad money supply grew just 0.1 percent after a 1.3 percent rise in July. On the year, M4 was 12.6 percent higher -- the weakest annual rate since September 2008.
09:30 18Sep09 STOCK OF LENDING BY MAJOR UK LENDERS TO BUSINESSES FELL FURTHER IN AUG- BOE TRENDS IN LENDING REPORT
09:30 18Sep09 LENDING TO UK BUSINESSES DOWN 3.3 PCT Y/Y IN JULY VS ANNUAL FALL OF 0.5 PCT IN JUNE- BOE REPORT
09:30 18Sep09 MAJOR UK LENDERS APPROVED 57,000 MORTGAGES IN AUG, UP FROM 53,000 IN JULY - BOE
09:30 18Sep09 GROSS MORTGAGE LENDING BY MAJOR UK LENDERS 9.7 BLN STG IN AUG VS 9.4 BLN STG IN JULY -BOE
09:30 18Sep09-Lending to UK business weakest on record in July -BoE
LONDON, Sept 18 - Net lending to British firms fell in July by the biggest amount since records began in 1998, the Bank of England said on Friday, a further sign policymakers' huge efforts to get credit flowing are not feeding through yet.
However, mortgage approvals by major UK lenders rose in August for the seventh consecutive month to 57,000 from 53,000 in July, the BoE's monthly Trends in Lending report showed.
The net flow of lending to UK businesses fell 15.5 billion pounds in July after a 3.6 billion pounds fall in June.
"Major UK lenders indicated that their stock of lending to businesses fell further in August," the BoE said, adding that the weakness in July was across all sectors of the economy.
On a year ago, lending to companies was down 3.3 percent in July and the BoE said the outstanding stock of loans to UK businesses by UK resident foreign lenders had contracted very sharply in recent months.
"That is consistent with reports from market contacts of an increased bias towards domestic lending among banks internationally," the BoE said.
The poor business lending figures are likely to worry policymakers given extensive and costly measures aimed at improving the flow of finance to recession-hit companies.
The BoE, which has slashed interest rates to a record low of 0.5 percent and started buying assets to boost activity this year, has said it will take some time for its 175 billion pound quantitative easing efforts to feed through.
Separately, the BoE published provisional figures for broad money supply growth -- an indicator back in vogue as a way to gauge if QE is working.
In August, M4 broad money supply grew just 0.1 percent after a 1.3 percent rise in July. On the year, M4 was 12.6 percent higher -- the weakest annual rate since September 2008.
Please take the time to have a look around my Daughter's website www.daisypalmertrust.co.uk
(MSE Andrea says ok!)
(MSE Andrea says ok!)
0
Comments
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09:30 18Sep09 UK AUG PROVISIONAL M4 BROAD MONEY SUPPLY +0.1 PCT M/M, +12.6 PCT Y/Y, LOWEST YY RATE SINCE SEPT 2008
09:30 18Sep09 TABLE-UK Aug provisional broad money supply +0.1 pct
LONDON, Sept 18 - Broad money supply grew by
0.1 percent on the month in August, provisional data from the
Bank of England showed on Friday.
Below is a table of the data (figures in percentage
changes).
AUG JULY
M4 m/m 0.1 1.3
M4 y/y 12.6* 14.4
M4 lending m/m 0.1 0.2
M4 lending y/y 7.1** 8.2
* Weakest annual growth in M4 money supply since September
2008
** Weakest annual growth in M4 lending money supply since
August 2002Please take the time to have a look around my Daughter's website www.daisypalmertrust.co.uk
(MSE Andrea says ok!)0 -
Why?
With QE there is an extra £175bn out there. I thought the general idea was for this to be channeled through to business lending?
I know it may not happen straight away, but this is confusing...It's getting harder & harder to keep the government in the manner to which they have become accustomed.0 -
lemonjelly wrote: »Why?
With QE there is an extra £175bn out there. I thought the general idea was for this to be channeled through to business lending?
I know it may not happen straight away, but this is confusing...
come on lj, keep up....
as we all know, that dosh isn't filtering through, and instead banks are hoarding it on deposit back at the BOE earning 0.50% interest.
this rate is currently at the centre of a debate, whether or not BOE will cut this rate lower, in a bid to get the Banks filtrering it through elsewhere..Please take the time to have a look around my Daughter's website www.daisypalmertrust.co.uk
(MSE Andrea says ok!)0 -
lemonjelly wrote: »Why?
With QE there is an extra £175bn out there. I thought the general idea was for this to be channeled through to business lending?
I know it may not happen straight away, but this is confusing...
On a global level there is retrenchment to domestic markets.On a year ago, lending to companies was down 3.3 percent in July and the BoE said the outstanding stock of loans to UK businesses by UK resident foreign lenders had contracted very sharply in recent months.
This is the same issue which has effected the residential mortgage markets for some time.
Goes round in a loop to us saving more to fund our own borrowing.0 -
inspector_monkfish wrote: »come on lj, keep up....
as we all know, that dosh isn't filtering through, and instead banks are hoarding it on deposit back at the BOE earning 0.50% interest.
this rate is currently at the centre of a debate, whether or not BOE will cut this rate lower, in a bid to get the Banks filtrering it through elsewhere..Thrugelmir wrote: »On a global level there is retrenchment to domestic markets.
This is the same issue which has effected the residential mortgage markets for some time.
Goes round in a loop to us saving more to fund our own borrowing.
Thanks both.
I floated a theory yesterday that the banks may be building up balance sheets in anticipation of further problems, possibly coming from individuals struggling with their secured/unsecured debts, and rising bankruptcies. Can I ask if you think this (or something similar) could be a reason why?It's getting harder & harder to keep the government in the manner to which they have become accustomed.0 -
lemonjelly wrote: »Thanks both.
I floated a theory yesterday that the banks may be building up balance sheets in anticipation of further problems, possibly coming from individuals struggling with their secured/unsecured debts, and rising bankruptcies. Can I ask if you think this (or something similar) could be a reason why?
it certainly one theory worth considering, among severalPlease take the time to have a look around my Daughter's website www.daisypalmertrust.co.uk
(MSE Andrea says ok!)0 -
inspector_monkfish wrote: »it certainly one theory worth considering, among several
Don't be shy, got any others?
It's getting harder & harder to keep the government in the manner to which they have become accustomed.0 -
lemonjelly wrote: »Don't be shy, got any others?
errrm... actually, no.... yours is the only plausable one !!Please take the time to have a look around my Daughter's website www.daisypalmertrust.co.uk
(MSE Andrea says ok!)0 -
lemonjelly wrote: »Thanks both.
I floated a theory yesterday that the banks may be building up balance sheets in anticipation of further problems, possibly coming from individuals struggling with their secured/unsecured debts, and rising bankruptcies. Can I ask if you think this (or something similar) could be a reason why?
Banks are contracting their asset (lending) books for various reasons. Continued defaults and writeoffs, lack of wholesale funding , and ultimately the increased capital requirements that will be imposed once the situation is normalised.
The banks are highly leveraged on their capital bases. Barclays as an example had lent £73 for every £1 of capital on its balance sheet at their 2008 year end.
Banks no longer take a £100 in deposits from A and lend £100 to B. The situation is far more complex as the banks use Fractional Reserve Banking in effect to create credit.0 -
Thrugelmir wrote: »Banks are contracting their asset (lending) books for various reasons. Continued defaults and writeoffs, lack of wholesale funding , and ultimately the increased capital requirements that will be imposed once the situation is normalised.
The banks are highly leveraged on their capital bases. Barclays as an example had lent £73 for every £1 of capital on its balance sheet at their 2008 year end.
Banks no longer take a £100 in deposits from A and lend £100 to B. The situation is far more complex as the banks use Fractional Reserve Banking in effect to create credit.
:eek::eek::eek::eek::eek:It's getting harder & harder to keep the government in the manner to which they have become accustomed.0
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