Financials services lending to British businesses is expected to grow 2.5% this year, to £417bn, but that’s still some 27.5% below the 2008 peak, according to a new report from the EY Item Club.
The report expects business lending to increase 4.8% each year on average from 2014 to 2017, but this has been revised down from the 5.3% the economic group was forecasting last quarter.
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EY Item Club says that the weakness of financial services lending to businesses may have been in part down to the rise of alternative finance, such as “peer-to-peer lending, crowdsource funding, venture capital funds and finance from insurance and pension funds”, “albeit in low levels”.
The report says: “Prudent lending practices by banks are likely to prevent a return to the lending levels seen before the global financial crisis.
“By 2017, we forecast business lending to approach £500bn, still about 15% below 2008 levels.”
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