UK200Group comments on new figures that show borrowing amongst individuals and SMEs has gone up
Members of the UK200Group of independent accountancy and law firms have commented on new figures that show borrowing amongst individuals and SMEs has gone up.
A new report by the Bank of England (BoE) has revealed that that the number of loan applications submitted by individuals and businesses has drastically increased since the election in May.
The BoE figures included in their report show that households borrowed an additional £2.1bn in secured loans in May, up from £1.7bn in April. This figure is up from an average of £1.9bn of borrowing a month in 2014.
Meanwhile, the proportion of banks reporting a rise in lending demands from SMEs outweighed those reporting a fall by a margin of 19.6% – the fastest increase in demand for credit from SMEs since 2013.
Banks also seem more willing to approve loans to SMEs, according to the BoE, with a net balance of 26.6% of banks reporting that they had granted a higher proportion of SME loans during the second quarter of 2015 than the first quarter.
Duncan Montgomery, Tax Partner at UK200Group member firm Whittingham Riddell LLP, said: “With clarity following the Scottish independence referendum, May’s election result and this year’s strong first quarters for many businesses, appetite is there to invest for growth. Corporate deals are moving swiftly ahead, and SMEs are able, with proper technology, to really push the right products and customers to maximise return on investment. The budget will have little impact on SMEs except to encourage investment, barring a small blip for cash extraction at cheap rates before April 2016. Business owners need to properly plan their cash extraction to ensure the right rates are paid, which are still very generous in the UK.”
David Ingall, past president of the UK200Group, said: “The feeling was that everyone was holding their powder dry whilst the election campaign was on. Why borrow for future projects when there was a prospect of an ‘anti-business party’ being in power? Now that uncertainty is settled, shelved projects can go ahead. Yes, low interest rates are an encouragement and who knows how long they are going to last?”
