West Midlands bucks the trend on bank lending to business
THE West Midlands is bucking the national trend in terms of lending to businesses, banking experts have said.
Latest Bank of England lending figures show lending to British businesses fell at its fastest pace for almost two years in February.
The situation is said to underline the lack of confidence due to the fragile economic conditions.
However, Lloyds TSB Commercial said the picture in the West Midlands was much different to that nationally.
Following the publication of the Bank of England Trends in Lending report, John Robson, regional director for Lloyds TSB Commercial in Midlands and North, said: “Although the latest Bank of England figures show a decline in net lending across the industry, we have been moving in the opposite direction.
“Our net lending has been growing by 3% a year and we’ve pledged to keep it positive this year by lending at least £12bn to our SME customers by the end of 2012.”
Part of this is due to the economy of the West Midlands looking slightly more robust than elsewhere; propped up by a stronger manufacturing sector, especially in the automotive supply chain.
The Bank of England report shows that lending by the major UK banks and building societies fell by £4bn during February – the largest fall since March 2010, when lending dropped by £4.1bn.
The stark national picture is evidenced by the fact that during a three-month period, lending to businesses fell by about £9bn.
Annual lending to businesses continues to stutter and is falling at the rate of about 3%. In contrast, the average annual growth rate before recession was around 15%.
The figures will be a blow to the Government which has consistently tried to boost lending to small businesses through initiatives such as Project Merlin.
However, the problem is also thought to lie with firms themselves, many of which are reluctant to apply for cash because of a lack of confidence in their markets. The situation has been made worse by the crisis in the Eurozone denting export potential.
The health of the economy will be revealed in more detail tomorrow when the Office for National Statistics publishes the latest growth figures. Predictions are that the first quarter will show the economy remained just in the black with growth at a very low level, possibly 0.1%, ensuring a return to recession is avoided.