Firms appear to have increased borrowing ahead of a new government forming and the 31 October deadline draws closer.
SMEs borrowing reached a two year high in June, increasing by £375m, a growth rate of 0.8 per cent, as business began to increasingly consider preparations for a ‘no--deal’ Brexit, according to figures out today from the Bank of England show.
Borrowing by firms increased overall by £2.5bn in June. During the first half of 2019, borrowing has been stronger than the same period in 2018, and the annual growth rate has, therefore, risen, the Bank of England outlined in its monthly statistics on borrowing and deposits by households and businesses (which is used by the central bank’s policy committees).
For non-financial businesses, the growth rate rose to 4.4 per cent. Within this, the growth rate of borrowing by large business rose to 6.4 per cent; and the growth of SME borrowing rose to 0.8 per cent, its highest since August 2017.
Michael Biemann, CEO of the digital property lender, Selina Finance, says SME borrowing from the banks reached a near two-year high in June, but it was a hollow victory at best.
“SME lending by the high street banks may have ticked up slightly in June but the overall picture remains desperate and lending rates are likely to contract further in the months ahead as we enter the Brexit endgame."