Tuesday, April 21, 2009

UK Trends in lending by April!

The latest report from the BOE about trends in lending in the three main areas, mortgage, business and consumer lending, shows trends of more slowing.

The overall picture shows that the lending to individuals and businesses, Chart A and Chart B, show net lending sharply down in the last 6 months. More importantly, the Chart shows lending from the late 60's to today.

The Thatcher administration in the 1980's, even in the throes of the oil shock of the mid-70's early 80's and the Iran Iraq War, has still out performed the mid-90's and 2000's by far. In fact, lending has been dramatically decreased and remained at modest levels during the Blair era compared to the Thatcher era.

What we also see in Chart 1.3, the credit squeeze--at least in respect to corporate finance-- has been been in full play since Q2 2007. Even with rates at their lowest, from the LIBOR to the Bank official rate, credit has not yet been visible to businesses.

Business lending, goes hand in hand with consumer credit, in my estimation. The lending to businesses, are a bell weather for any other consumer type lending because if a bank, is not willing or unable to lend on the premise of a corporate equity balance sheet or projected income from a corporation, they are not going to extend consumer credit. And, as the report states, consumer lending--credit cards and personal loans-- has plummeted and lenders, have retrenched in order to recoup come of their losses.

The nationalization has not worked. The capital injection has not been enough, or ill-targeted--liquidity is up. What next for Brown, Darling and King?

It appears as if the corporate community has back lashed against the Labour Party. It appears as if its not the season for business.
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