The latest Bank of England quarterly lending survey has revealed lending to British businesses slumped in January.
According to the report, net lending fell by 9.3% during the month - the sharpest decline since records began in 1999.
Banks and building societies lent £6.5 billion in January and followed a drop of £3.4 billion in the previous month, the Bank said.
The Bank said: “The stock of lending to businesses has fallen in recent months. The major UK lenders reported that their net lending flows remained subdued in February, though were less weak than in January.”
Meanwhile, economist Howard Archer from IHS Global Insight, said: “Tight credit conditions remain a serious obstacle to significant, sustainable recovery.
“It is evident that ongoing very weak bank lending to companies is being influenced significantly by low demand for credit in addition to restricted supply,” added Mr Archer.
The figures come despite the Government’s attempt to boost lending. It injected £200 billion into the economy via its quantitative easing scheme.
However, the Bank said the availability of credit is getting better, though more for larger businesses than smaller ones, where availability is “improving but still fragile”.
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