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UK banks boost lending following Covid-19 support cliff edge

UK banks are increasing lending, signalling the end of a severe loan shortage after the Covid-19 support programs of the government were canceled.

The total amount of credit granted to UK businesses increased from PS12bn to PS533bn over the period of nine months from May to May, as per research using Bank of England data published today by the debt advisory firm ACP Altenburg Advisory.

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The increase follows an PS7bn decrease in the amount of loans outstanding in just two months following the expiration of the government-backed loan scheme.

In the bail-back loan program that was introduced to funnel cheap funds into businesses who are experiencing the economic consequences of the epidemic, the government would take on the entire cost for banks if their loans deteriorated.

The goal was to encourage lenders to provide the private sector through reducing the risk of default.

An additional instalment, dubbed”the coronavirus loan program made up 80 percent of the banks’ losses.

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