Fall in loans to UK businesses the second fastest among major economies
By Daniel Hunter
The value of loans to businesses in the UK has slumped by 13% since the collapse of Lehman Brothers, the second fastest fall among the G8, according to UHY, the international accounting and consultancy network.
Outstanding loans to British businesses now stand at US$673 billion, down from US$775 billion in December 2008.
The UK ranks 18th out of the 22 countries surveyed in terms of the fastest growth rate of loans to businesses. In contrast, all of the BRIC nations have increased their lending to businesses by double digits since the collapse of Lehman Brothers. Of the major developed economies, only the U.S. has seen a faster fall in business loans.
The research shows that the BRIC nations have, on average, increased lending to businesses by 62% since December 2008 compared to banks G8 nations, which have, on average decreased funding to businesses by 4% over the same period.
UHY professionals studied Central Bank data on outstanding loans to businesses in 22 countries across its international network, including the G8, as well as key emerging economies, including the BRIC nations (Brazil, Russia, India and China).
According to UHY, the UK government has seen little success in its attempts to boost lending to businesses post-Lehman Brothers as banks looked to repair their balance sheets by reducing their loan books. In many countries, the reluctance of banks to lend to businesses has been identified as an important factor inhibiting economic growth.
The country with the fastest increase in loans to businesses is China, one of the so-called BRIC nations, where the amount of debt held by businesses increased by 65% since the onset of the credit crunch. Chinese banks have approximately US$6.9 trillion in outstanding loans with businesses, compared to US$4.2 trillion in December 2008.
The country which has seen the largest reduction in the value... continued on page two >