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Lending To Business Falls By £4.8Bn, Bank Of England Says

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http://www.bbc.co.uk/news/business-22213682

Lending to businesses in the UK has fallen by a further £4.8bn in the three months to February, the Bank of England has said.

That represents a fall of 4.4% in loans to companies and small firms from the same period a year earlier.

The Bank also reported that the mortgage market is "broadly unchanged."

Figures from the Council of Mortgage Lenders (CML) paint a similar picture, with lending in the first quarter of 2013 similar to last year.

O dear.

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Here's an interesting bit from one of the spreadsheets, the numbers below are defined as follows:

Cost = net % of respondents saying credit is 'costly' minus those saying it's 'cheap'.

Availability = net % of those saying it's 'available' minus those reporting it's 'hard to get'.

Q12013:

Cost of credit -45 (this implies a split of ~28/73)

Availability of credit 54 (implied split of ~77/23)

So, businesses overwhelmingly report credit is both cheap and available. Overall credit conditions could hardly be better it seems. Yet few want it.

Edited by cheeznbreed

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A called ******** on Mervs claim (as many did) that FLS was partly intended to help business.

It isn't, increased housing and commercial psace is almost entirely negative to most businesses. We have fraudsters running a gaming ring for the benefit of a few companies - land banking ones and screw the rest.

Vive la bubble, BOE policy the same as it ever was - destroy business with high costs, skew the invetment table, indebt as many as possible to create their fake version of growth.

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So, businesses overwhelmingly report credit is both cheap and available. Overall credit conditions could hardly be better it seems. Yet few want it.

If you look at what businesses say are their major problems (e.g. Quarterly Survey, see esp. p. 11, then finance is low down the list. The major problem is the down-turn. And why would you want credit in a recession if you couyld avoid it?

Peter.

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This is quite a reversal for the claims of Mervyn King and the Bank of England. I note that borrowing costs for smaller businesses are in fact rising and not falling as promised.

Remember also that we were promised that all this easing would lead to lower borrowing costs for industry and individuals?

The Bank’s measure of the effective interest rate on new borrowing for businesses was broadly unchanged in the three months to February.

That phrase “broadly unchanged” seems to be popping up a bit does it not? As I wonder if it should find its way into my financial lexicon for these times. Also those concerned about the small and medium sized business sector (SME) will be alarmed by this bit.

In the survey, net balances of small and medium-sized firms reported some increase in costs over the same period,

Yet again we find ourselves observing that up is the new down!

Actually the chart showing borrowing costs for the smallest companies shows a sharp rise to nearly 5% as we moved into 2013.

http://www.mindfulmoney.co.uk/wp/?p=13450&preview=true

So what has actually happened?

I however have regularly pointed out that these stimulus plans have as their clearest effect operated as a boost for bank profitability

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Obviously this complete failure of the Funding for Lending scheme will require it to be extended and expanded.

The Clown is already agitating for such an extension, see the minutes of last month's MPC meeting. Not to mention that if he'd got his way we'd have had a LOT more QE by now too. Can't wait to hear the eulogium for him from Osborne. There won't be a dry seat in the house.

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Obviously this complete failure of the Funding for Lending scheme will require it to be extended and expanded.

This "scheme" is just more distraction, banks won`t lend on property again until there is a crash. Anyone clinging on to their house, in most parts of the country, in the hope that bubble lending will come back and bring a Greater Fool to their door is badly deluded IMO.

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For many small businesses the concept of limited liability does not exist.

Banks are wanting personal guarantees from directors even if business assets seem to cover any borrowings.

Directors are telling the banks to do one. We all know the banks can borrow from BoE at 0.5% via FFL, yet want to charge high interest rates as well as having the personal guarantee.

Result: stalemate and no business investment, so no growth.

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Interesting they still haven't figured out that lending does not drive the economy. Still churning out the same drivel. By now any thirteen year old with a slight interest in economics understands the credit cycle. But not the BOE. They are still using the failed models that they used to create the mess in the first place.

Giving those fools at the BOE control of the British economy has been an unmitigated disaster. They did not have to blow up a huge credit bubble. That was their choice. Nobody made them. They wanted a credit bubble and artificially created one. Then, they refused to allow a correction and created a depression. Not many people still arguing with me about that one now. This is undoubtedly a depression. The economy has been stagnant since about 2007, getting on for a decade ago. A huge correction is still required to fix the BOE's stupidity.

And they still have not learned a thing. 'Get banks lending, jump start the economy, lower interest rates blah blah blah.' What is wrong with these people? The economy is saturated with debt. People only have a capacity to repay a certain amount and that amount has been reached. This isn't rocket science. Who put these gibbering morons in charge of everyone's money?

Sooner we get rid of that bunch of cretins the better in my book. A team of trained monkeys would do a better job. Leaving things alone to look after themselves would be better still.

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Interesting they still haven't figured out that lending does not drive the economy. Still churning out the same drivel. By now any thirteen year old with a slight interest in economics understands the credit cycle. But not the BOE. They are still using the failed models that they used to create the mess in the first place.

Giving those fools at the BOE control of the British economy has been an unmitigated disaster. They did not have to blow up a huge credit bubble. That was their choice. Nobody made them. They wanted a credit bubble and artificially created one. Then, they refused to allow a correction and created a depression. Not many people still arguing with me about that one now. This is undoubtedly a depression. The economy has been stagnant since about 2007, getting on for a decade ago. A huge correction is still required to fix the BOE's stupidity.

And they still have not learned a thing. 'Get banks lending, jump start the economy, lower interest rates blah blah blah.' What is wrong with these people? The economy is saturated with debt. People only have a capacity to repay a certain amount and that amount has been reached. This isn't rocket science. Who put these gibbering morons in charge of everyone's money?

Sooner we get rid of that bunch of cretins the better in my book. A team of trained monkeys would do a better job. Leaving things alone to look after themselves would be better still.

And something approaching a quarter of what nominal GDP growth has occured since 2007 has been due to nothing more than increasing imputed rents to homeowners, a pure fantasy number now accounting for 8.6% of our national economy.

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Could it be that businesses have enough cash?

They might be persuaded to give it up for lending if interest rates were better...

Or no reason to invest as the reutrn will not be forthcoming (especially those that see their current trading just a reflection of cheap money).

They are diverting the money elsewhere, very large sum from me is not going into business now and dedicated to a house purchase with lowest possible mortgage. The business itself will go abroad, no interst in doing it here now.

The banks are taking the QE money and jsut using it to their advantage and propping their loan book related assets, manipualtion on a grand scale sanctioned and funded from the central bank.

Invetment / expansion is far more expensive than it should be thanks to QE propping up factory/workshop space tht could be utilised but is no longer economic.

Edited by OnlyMe

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For many small businesses the concept of limited liability does not exist.

Banks are wanting personal guarantees from directors even if business assets seem to cover any borrowings.

Directors are telling the banks to do one. We all know the banks can borrow from BoE at 0.5% via FFL, yet want to charge high interest rates as well as having the personal guarantee.

Result: stalemate and no business investment, so no growth.

If a business is good the directors have to take a risk.......got assets be prepared to wage them against the business plan.....the rewards are worth it.......why should the lenders and more importantly other businesses who the indebted do business with (could pull them down with them) take all the risk.....sure a good business plan debt with a security should cost no more in interest and fees than a low risk mortgage. ;)

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Best bit

Buy-to-let

Gross lending to buy-to-let (BTL) borrowers in 2012 was at its

highest in four years

Sigh.

We have learned nothing. Maybe we should transfer all housing stock to BTL landlords and then tax the hell out of it!

B)

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Or no reason to invest as the reutrn will not be forthcoming (especially those that see their current trading just a reflection of cheap money).

They are diverting the money elsewhere, very large sum from me is not going into business now and dedicated to a house purchase with lowest possible mortgage. The business itself will go abroad, no interst in doing it here now.

The banks are taking the QE money and jsut using it to their advantage and propping their loan book related assets, manipualtion on a grand scale sanctioned and funded from the central bank.

Invetment / expansion is far more expensive than it should be thanks to QE propping up factory/workshop space tht could be utilised but is no longer economic.

Logical thought....when you know that there are big corporates sitting on funds and not investing, what reasons for a SME to borrow to invest at a far greater risk and cost......why are we no longer economic? is it partly because our cost of living is so high requiring big pay packets to live at a basic level? :unsure:

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And they still have not learned a thing. 'Get banks lending, jump start the economy, lower interest rates blah blah blah.' What is wrong with these people? The economy is saturated with debt. People only have a capacity to repay a certain amount and that amount has been reached. This isn't rocket science. Who put these gibbering morons in charge of everyone's money?

I'm fairly sure that if you asked most small businessmen what their problem was they would not reply 'lack of credit'- they would more likely reply 'lack of customers'.

Demand is the problem- not lack of supply. Anyway what kind of fool would try to make money the hard way by investing in a small business when they could take their cheap BOE cash down to the casino City and gamble with it- secure in the knowledge that if it all goes tits up they will be bailed out by their local friendly state representative.

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Best bit

Sigh.

We have learned nothing. Maybe we should transfer all housing stock to BTL landlords and then tax the hell out of it!

B)

It totally beats me why anyone go for a BTL at the moment. In the medium/long term there are massive IR rise and capital depreciation risks and of course you will almost certainly be a high rate tax payer and thus paying 40% tax on any capital repayment made from the rent. Even if your buying outright, the tax on the rent brings down the net yield to about 2-3% (and thats assuming no maintenance or voids ...) .

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I'm fairly sure that if you asked most small businessmen what their problem was they would not reply 'lack of credit'- they would more likely reply 'lack of customers'.

Yes, see the survey quoted above,

Peter.

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  • 242 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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