The slump in business lending has deepened, it has emerged, further sharpening the contrast with a surging mortgage market.
Companies took £4.7bn less in loans in November, the biggest drop in more than two years and nearly five times the recent average monthly decline of £1bn, according to figures from the Bank of England. The slide was due to a fall in lending to large businesses, as loans to small and medium-sized companies actually edged up slightly.
Economists are split over whether the decline is due to weak demand for bank finance or lenders’ reluctance to grant loans to business.
Howard Archer, chief UK economist at IHS, said the data suggested that banks “have yet to become markedly more prepared to lend to businesses amid the improved economic situation and outlook”. But Blerina Uruçi, economist at Barclays, believes businesses are unlikely to be held back by weak bank finance as the corporate sector has amassed a large cash surplus in recent years. Businesses are also increasingly turning to the bond market as a cheaper alternative.
Mark Carney, governor of the Bank of England, has redoubled efforts to boost business lending by making it the sole beneficiary of the Funding for Lending Scheme, which allows lenders to borrow at rock-bottom rates in exchange for providing loans. Previously, the scheme applied to all loans.
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Spanish princess summoned over fraud
A judge in Spain summons a daughter of King Juan Carlos, the Infanta Cristina, to appear in court over accusations of tax fraud and money-laundering.
Missed this earlier --the US Treasury secretary has renewed the pressure on Germany to do more to help its neighbours by stimulating its domestic economy.
On a visit to Europe, Jack Lew told a press conference in Berlin that Washington believes more internal demand within Germany would be good news for the whole region.
Lew told a press conference, following a meeting with German finance minister Wolfgang Schauble, that:
We continue to believe that policies that would promote more domestic investment and demand would be good for the German economy and the global economy.
Schauble, though, denied that Germany's export strength is a threat. Indeed, we should be more grateful for it, he suggests:
"The eurozone as a whole has a very small surplus .... and without the German surplus toward third countries, the eurozone would have no surplus at all, but a deficit.
The American deficit won't be improved by a European one being added to it."
Euro area unemployment was 12.1% in November 2013, Eurostat figures published on Wednesday showed. The EU28 unemployment was 10.9% and both rates increased compared with November 2012. The lowest unemployment rates were recorded in Austria (4.8%) and Germany (5.2%), the highest in Greece (27.4% in September 2013) and Spain (26.7%).
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