Latest news : Lending falls £30bn

The total lending of UK banks fell by £30bn between May 2009 and this May, according to figures released by financial services firm UBS .

Total lending fell from £505bn to £476bn, with the firm attributing the decline to the demise of some banking institutions and less lending from foreign banks.

‘The large banks that survived are in many cases lending as much as they ever were, however they simply can’t make up for all the banks that have left,’ said John-Paul Crutchley, a banks analyst at UBS.

UBS’s findings come as the Governor of the Bank of England, Mervyn King, called on banks to help support small to medium enterprises.

In a recent appearance before the House of Commons Treasury Committee, Mr King called the banks’ reluctance to help struggling businesses ‘heartbreaking’, and suggested that small companies were needlessly going out of business because of their stinginess.

‘I meet many people who run small and medium enterprises and the thing that really makes them angry is that, having built up a business often over several generations and had the same banking relationship for 60, 80 years, then suddenly comes a letter churned out by a computer saying the terms of our relationship have changed,’ he said.

‘It is heartbreaking sometimes. It is a lot harder to build a business than it is to sit in London and trade away,’ added Mr King.

With the government encouraging graduates struggling to secure employment to set up their own enterprises, it looks like many are in for a tough ride.