How the age of borrowing came to and end
This is what a credit crunch looks like (click on image for larger version). Since 2007 British businesses have been borrowing less from banks, raising less cash in the bond markets and closing less equity investment deals.
Today they are disbursing investment faster than they take it on.
Loans, in blue, show a meltdown since the heady days of 2007. The fall-off is not entirely due to banks refusing to lend. Many businesses are reluctant to borrow, others are paying off existing loans. Before the credit crunch started, in 2008, British businesses had debts equivalent to 114% of GDP, compared to Japan 96%, USA 78%, Canada 54%, Brazil 30%. Of the major world economies only Spain’s businesses were in a greater state of indebtedness at 136% and South Korea with 115%.
Some analysts may say the deleveraging was overdue, looking at how indebted British banks were in 2008. That maybe so, but as this chart shows, the process has been a profound one.
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