BoE Lending: Are banks culturally stuck in 2008?

“In the real economy opportunities are now flowing freely, but traditional lenders are still restricting liquidity.  To seize the moment and grow British firms will need finance, yet the mainstream financial system doesn’t seem to have the manoeuvrability to keep up.  Banks are culturally stuck in 2008 – while most businesses are already looking forward to a prosperous 2015.

“Large high street lenders are still turning around very slowly from the most defensive of strategies.  That’s not really suited to the economic climate of 2014 and expectations for 2015.  Particularly for the many of the smallest and most nimble of businesses, the recession that ended almost half a decade ago now feels like history.  And that mismatch is most keenly felt in the property industry – bank lending for construction is down almost 7% from this point last year.  A lack of homes is already being felt by aspiring households, and at some point a lack of commercial space could have a similar effect on aspiring businesses.  Alternative finance is filling the gap, with lending for conversions and refurbishments more than doubling in the last year – but the whole financial system needs to embrace new approaches more quickly.

“Britain’s economic future will be very different to the world of 2007 or 2008.  And as the recovery accelerates, the future will be here sooner rather than later.”