Bank Lending Problems Ease as Economy takes better shape
I know its April 1st, but it’s no joke………the Bank of England’s Credit Conditions Survey, just published, reports that the appetite for lending is increasing as the economic outlook becomes more rosy. This appetite has been whetted by the news that there has been an unexpected fall during the first three months of 2010 of medium and large company defaults on loans, and manufacturing activity in the UK recorded its best month of growth for 15 years in March. ( as reported by the Purchasing Managers Index).
This more optimistic picture does question the ongoing relevance of the Chancellor’s Credit Adjudicator announced during the recent Budget. I suspect that as the economy improves, very few loans will be refused without good justification by banks- after all, banks like to make money from lending, and this has always been the case. As a result, I reckon that companies will appeal to the Credit Adjudicator to look into unsuccessful loan applications, for him to discover that the large majority were kicked into touch for good commercial reasons.
Still, with the FTSE 100 continuing to rise, bank lending easing, and manufacturing output heading in the right direction, maybe we can all really start to see a clearing in the forest.
Have a nice Easter everyone!