SME lending growth hits two-year low while consumer borrowing rebounds
LENDING to small-and-medium-sized enterprises (SMEs) declined in December at the steepest rate for three years while consumer borrowing ticked back up, Bank of England data shows.
The latest money and credit release from the Bank revealed SME lending declined by £0.4bn in December 2017, the largest decline since the same month in 2015.
Paul Goodman, chairman of the National Association of Commercial Finance Brokers, suggested some SMEs may be awaiting the outcome of Brexit negotiations before taking on more borrowing.
Read more: Cash flow issues keep most SME bosses awake at night
“Small business appetite for finance is looking increasingly shaky as a noxious combination of ongoing uncertainty and squeezed consumer confidence continues to tighten its grip,” he said.
“This is the largest decline in three years and signals that a number of small businesses are waiting to see how the negotiations over Europe turn out.
“It has to be remembered that this is just a narrow snapshot of the whole market though. Lending levels outside of the UK’s main banks are continuing to hold steady, a sign that businesses are continuing to seek finance outside of the traditional avenues for growth.
“What we need now is a concerted effort from the government to signal to SMEs that all the UK’s lenders are open for business.
“An ongoing awareness programme highlighting the full spectrum of finance options outside of just high street lenders will certainly help.”
SME confidence may have been shaken but consumer borrowing for personal loans and credit cards rebounded during December.
Consumer credit lending was up 9.5 per cent annually during the month, reversing a drop recorded during November.
The biggest increase was in personal loans, up 9.8 per cent on a 12-month basis, compared with 9.5 per cent in November, but still below the 10 per cent recorded earlier in 2017.
Credit card borrowing also improved, up 8.9 per cent year-on-year in December compared with 8.8 per cent a month before.
Read more: SMEs optimistic despite Brexit and late payments
Read more: Brexit woes could slow invoice finance growth
