From early next year the Bank will not be issuing any new borrowing allowances for mortgage lending.Bank governor Mark Carney said: “Over the past year the Funding for Lending Scheme has contributed to the recovery by helping to significantly improve credit conditions, especially for households. “The changes announced today refocus the FLS where it is most needed – to underpin the supply of credit to small businesses over the next year – without providing further broad support to household lending that is no longer needed.” The housing market has picked up following FLS and the Help to Buy scheme, provoking fears of a new housing bubble. Lending to businesses hasn’t seen the same pickup. John Allan, national chairman of the Federation of Small Businesses, said the announcement was “surprising yet refreshing”. He said: “It is encouraging that he has recognised the contribution small firms make to job creation and the real economy has been given priority over the housing market, which is receiving assistance in other areas such as Help to Buy. “FLS has already helped to reduce the cost of finance for businesses. What we now need is to see a focus on increasing the number of firms getting access to the finance they need to grow.” But Stephen Roper, director at the Enterprise Research Centre, said a focus on small firms could be to the detriment of medium-sized companies. He said: “This continues a worrying trend of shutting out medium-sized firms from many of the UK policy initiatives designed to support growth in smaller firms.
“The UK’s medium-sized businesses provide around a third of private sector jobs in the UK and many are ambitious and keen to invest, grow and develop global export profiles.
“Extending the Funding for Lending scheme to include medium-sized businesses would support their ambition and maximise their potential contribution to UK growth.”Image source
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