Some interesting statistics flying around over the weekend
what with the economy doing far better than expected it looks like the Bank of England governor may need to make a decision on interest rates in a matter of a few
months. I am not sure Carney will be forced into making the decision that soon.
He doesn’t strike me as a man who will be forced into any situation. The economy badly needs a long spell of stability and low interest
rates, not a step into the unknown that a hike in rates would bring about. We have a
fledgling housing market that is seeing a well-earned recovery and with wages
still suppressed there is unlikely to be a return of a much feared ‘bubble’.
Carney is more likely to link wages to inflation as a ‘get out of jail free
card’ to get himself off the hook.
I may be proved wrong but I am hoping we don’t see any rates
rising until well into Q4 2014 or early 2015.
Barclays decision to ‘transfer’ 800,000 of its small
businesses away from free banking towards a charge based structure will do no
favours for the already hammered reputation. Barclays insist the move will only
affect about 250,000 businesses currently banking with Barclays – so that’s all
right then. Business lending has never been a priority with the banks barring a
few exceptions and is rarely more than 10% of any the major banks total
lending. Major banks do not like lending to small businesses and never have to
be fair to them and the Basel II rules make it more difficult for lending to
take place.
Okay, so I understand business lending had risen slightly over
the first half of 2013, but if you are already starting from a very low
starting point then it’s not really great news. In any event, I now understand
the percentage of lending to small businesses has fallen back by about a third to around
7% of total bank lending that may contribute towards businesses having cash-flow problems and seeking debt advice sooner, without the support they need from the banks. The bottom line is small to medium sized businesses
are just not a core demographic for any of the major banks and the sooner businesses
realise that banks are no friend to business the better.
Written by: Mike Smith
