Reports in Bloomberg on Monday (Feb. 26) said that, according to new data, businesses in the U.K. are borrowing at their lowest rate since 2015, citing data from lobby group U.K. Finance. Lending to non-financial businesses declined 1.4 percent year over year in January, the group’s stats show.
Analysts at U.K. Finance noted the data reflects businesses’ decision to “err on the side of caution,” including the adoption of a “wait-and-see attitude to trading uncertainties, opting to use their deposits as buffers for spending decisions,” according to U.K. Finance Managing Director Eric Leenders.
Reports did not indicate exact factors behind the uncertainty, but Brexit is almost certainly one cause. Researchers in 2016 predicted financial institutions in the U.K. to lose some of their corporate customer base. Greenwich Associates released a report at the time that found about 40 percent of European companies, and nearly 25 percent of U.K. companies, plan to switch financial service providers as a result of Brexit.
“Since the vote, the biggest winners are the global banks, with 20 percent of continental corporates planning to increase business with these banks and U.K. corporates staying net neutral,” said Tobias Miarka, the Greenwich managing director who, according to the report at the time, wrote the study.
Separate data released earlier this month from the British Business Bank (BBB) found small businesses (SMBs) in the U.K. are borrowing less too. According to the BBB, fewer SMBs applied for a loan at big banks, while more small firms said they’re concerned they would be rejected for a loan if they were to apply with a traditional lender. Bank lending to small firms flattened in 2017, the report found, while just 1.7 percent of the market’s 5.7 million small businesses applied for a bank loan or overdraft last year.