FLS 'is still struggling to help businesses'

Banks are unlikely to turn on the credit taps to businesses over the next three months, the Bank of England's latest snapshot of lending conditions said yesterday.

In findings that pose further questions over the impact of the Funding for Lending scheme (FLS), the Bank's latest credit conditions survey said overall credit availability to corporates "would be little changed" in the second quarter of 2013. Banks said demand for loans had slumped in the first three months of 2013 amid wobbling confidence over the economic outlook, although they expect appetite for credit to pick up in the coming quarter.

Large firms are gaining more benefit from cheaper loans than smaller businesses. The FLS has cut mortgage costs, but struggled to make an impact on business loans.