Centre Director Paul Mizen comments on schemes to restore UK bank lending

In a roundtable discussion at the Groupment de Researches conference Poitiers, France on ‘restoring the bank lending channel’ Professor Paul Mizen noted that in the UK growth of bank lending to all private non-financial companies had been running at 10-15% p.a. pre crisis, compared to an annual growth rate that has been zero or negative since 2010. While large and medium sized firms report greater availability of credit in BoE surveys, small firms do not report an improvement, and a much smaller improvement in cost of finance versus large and medium firms, which has impacted on investment. Recent attempts to simulate lending such as  the National Loan Guarantee Scheme offered by the UK government and the Funding for Lending Scheme, operated by the Bank of England, are welcome; evidence of their effectiveness is inconclusive at present. The full analysis of means to restore the bank lending channel is here.