Bank Expects Funding for Lending Boost in 2013

According to the Bank of England, the Funding for Lending Scheme (FLS) should start to make a difference in 2013 – in the last 6 months it is unlikely to have had much affect on lending volume.

The Bank explained that usual credit lags have meant that the effect of the government’s scheme would not be clear in 2012, but encouraging early signs indicate SMEs may start to see benefits from the scheme in 2013.

The FLS was initially launched by the Bank of England in July 2012 to incentivize banks to boost their lending by reducing their own borrowing costs.

The Bank of England has disclosed that several banks took advantage of the scheme and drew down almost £4.4bn in the scheme’s first couple of months – this helped to increase net borrowing by £496m.

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