Business lending falls by record amount

Lending to British businesses fell at a record annual rate in January, in a sign that the economy's recovery from recession is still patchy. The Bank of England figures highlight risks to Britain's recovery at a time when both the banking sector and the government are trying to repair their balance sheets. The flow of net lending fell by £6.5bn in January, nearly twice as fast as in December, the Bank said in its Trends in Lending report. That pushed the annual rate of decline to 9.3%, the biggest fall since monthly records began in 1999. Lenders reported that businesses were looking to reduce debt levels and demand for credit remained subdued. They said there had been no significant change in loan availability over the month. Separate figures showed Britain's broad money supply – which measures the amount of money available in the economy – expanded by 0.2% in February, slowing the annual rate to 3.6%, its weakest since February 2000. "Bank of England hopes in March 2009 that quantitative easing would boost money growth have so far not been realised," said Peter Dixon, an economist at Commerzbank.