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Loans to firms cut by £28bn

Loans from UK banks to companies have been cut by £28bn since the start of the global financial crisis brought on by the collapse of Lehman Brothers two years ago, according to the Bank of England.

The amount of loans outstanding to businesses is now £471 billion, down from a peak of £503 billion in September 2008 when Lehman Brothers filed for bankruptcy.

"We are worried that the fall in lending to businesses is just going to be filed away in the ‘too difficult to deal with' drawer," said Phillip Monks, chief executive of Aldermore.

"SMEs are the engine of the British economy, but they can't power on for ever if their ability to make vital investments and to hire new staff is compromised. This is particularly worrying as the deficit tackling measures mean the private sector must take more of their strain."

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Post Date: September 15th, 2010