Pressure grows on Bank over stimulus

The BoE’s Funding for Lending Scheme (FLS) aims to boost the flow of loans to companies and households. Banks and building societies had borrowed a total £13.8bn of discounted loans from the scheme by the end of 2012.

Investec analyst Ian Gordon said: “The main effect is to depress the savings rates now offered to retail depositors.”

The biggest borrower from the scheme, Lloyds Banking Group, had drawn £3bn, but its net lending shrunk by £3.1bn over the quarter. Santander, which has drawn £1bn, shrunk net lending by £2.8bn. Royal Bank of Scotland has borrowed £750m from FLS but its net lending fell by £1.7bn.

IHS Global Insight economist Howard Archer said the figures will “add to mounting pressure on the Bank of England”.

Barclays and Nationwide Building Society increased their lending by £1.9bn and £1.8bn respectively.

Leeds Building Society borrowed another £100m from FLS. Its net lending increased by £166m in the fourth quarter.

Clydesdale and Yorkshire banks, which are signed up to FLS but did not borrow from it in 2012, shrunk their net lending by £394m in the fourth quarter. Skipton and Yorkshire building societies are both signed up to the scheme but had yet to borrow from it.