By Steve Pateman
Head of UK Corporate and Commercial Banking

January is a good time to make resolutions and reflect on the year ahead and there are certainly a range of views and expectations as to what 2011 will bring. Economic growth has started to come through but faces severe headwinds as the UK cuts spending to manage the public sector deficit. The increase in VAT will fuel inflation statistics but also take further demand out of the equation - a peculiar combination for any economy! Our trading partners in Europe and the US face similar economic challenges whilst growth in Asia and South America is set to slow.

Despite these headwinds and some fairly inclement trading conditions, manufacturing and exports have strengthened and the outlook here remains positive. Prospects for retail and services seem more mixed, albeit the snow does not seem to have done as much damage to Christmas trading as anticipated. Any form of economic growth requires a combination of investment and good management and banks have a key role to play. An analysis of lending trends and drivers over recent times could extend to several volumes of contradictory evidence but what is clear is that for a sustainable recovery, there needs to be consistent access to investment finance and working capital. The quid pro quo is that investment and working capital funding is seen as a partnership investment by businesses and banks alike and managed as such.

That has certainly been our philosophy in building Santander's business in the UK and will remain so in 2011. We grew our lending to business by over 20% last year and would expect to do the same this year, funding over £1.8 billion of capital expenditure, working capital and acquisition finance, building some great partnerships and more importantly helping to create some great businesses that in turn will help the UK economy continue to recover. The more we, and the rest of the banking sector, can do along these lines in 2011 the better the chances of re-balancing the UK economy through sustained recovery and longer term growth. That seems like a pretty good New Year’s resolution to me.

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