Industry Sector Weekly by Lloyds TSB

The weaker than expected preliminary UK M4 money supply growth figures announced this week by the BoE was partially attributed to continued contraction in net new lending to the private corporate sector. The weaker than expected preliminary UK M4 money supply growth figures announced this week by the BoE was partially attributed to continued contraction in net new lending to the private corporate sector. Expectations were for M4 to have grown by 0.2% in August from the previous month; instead broad money supply actually fell by 0.2%, after rising by 0.4% in July. However, weakness in bank net corporate lending seems to be just as much about demand as it is about supply, according to anecdotal evidence in the latest BoE Trends in Lending report also released this week. Despite the current low interest rate environment and better capitalised financial institutions, growth in fixed business investment remains muted both in the manufacturing and non-manufacturing sectors, highlighting weakness in the demand for credit.

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