Fall in loans to UK businesses the second fastest among major economies
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...business cannot expand to fulfill an order, that order can be lost to a better financed overseas competitor.
“Small businesses are hugely reliant on bank financing as, unlike larger corporates, they are usually not able to raise money through bonds or share issues.”
The research shows that, many EU countries, including Romania, Czech Republic, Slovak Republic, the Netherlands, Italy, France and Germany have posted a significant increase in lending to businesses, despite the impact of the Eurozone crisis on the liquidity of European banks.
“The pace of deleveraging among many European banks — in comparison with American, British and Irish banks — has been painfully slow. This probably explains why lending to businesses in countries like Italy and Spain has increased, albeit not in real terms," Hornan added.
“Four years after the banking crisis and lending to UK SMEs is still falling. The challenge for the UK Government is to show that it can play a major role in reversing this trend.”
The research shows that, among the G8, Russia has seem the fastest increase in lending to businesses.
“The potential for growth of business credit in Russia remains high," Nikolay Litvinov, partner of UHY Yans-Audit LLC in Russia, a member of UHY, commented.
"Lending to businesses displayed improvement even during the global financial crisis. It is related, in many respects, to the financial stability achieved by cooperation between the state and the banking sector, as well as stable growth of Russia’s economy. Like other BRIC countries, Russia hasn’t got any preconditions for reduction in the scope of business credit.
“The recent commodities boom has insulated Russian from the full force of the global financial crisis. The Russian economy, though suffering a financial crisis in 2008/09, has recovered quite strongly since then. This has fuelled appetite for debt among Russian businesses and enabled well-capitalised Russian banks to meet... continued on page four >