The Bank of England has reported that business loans have dropped for the ninth consecutive month, as companies reduce debt levels rather than seek new loans.
Latest figures show that in October, business loans sank by £4.8bn, following a £4.6bn fall in September.
Many small businesses are concerned about the continuing lending freeze, brought on by the economic crisis. The scarcity of credit is a serious obstacle in the country’s fight back to financial recovery, according to Howard Archer, economist at HIS Global Insight.
The outlook, however, looks less bleak for 2010: the Bank of England reports that lenders “expected loan availability to the corporate sector to improve and the cost of borrowing to decline”.
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