Anger Over Rising Banking Rates

(Press Association) – BANKS HAVE BEEN ASKED to justify their business rates after a survey revealed more than four out of 10 retailers had seen lending costs rise despite a historically low base rate.

A quarterly survey of small retailers found 44% were hit by higher lending costs over the past three months, while the base rate has been held at 0.5% for five months.

The study by the British Retail Consortium (BRC) also gave further worrying evidence of dire credit conditions for the business sector, with almost a fifth seeing a reduction in bank finance.

The results of the BRC’s Quarterly Credit Conditions Monitor come after Chancellor Alistair Darling hauled bank chiefs in on Monday to grill them over business lending.

Concerns are growing that lenders are hoarding cash and not passing on the historically low interest rates or the money supply boost being offered by the Bank of England’s Quantitative Easing programme.

Jane Milne, business environment director at the BRC, said: ‘I’m shocked to hear that over 40% of SME retailers said banks had increased the cost of lending in the last three months — we should all be doing our bit to help speed the recovery.

‘How can these increased charges be justified?’

The survey also showed that of those retailers citing a fall in credit availability, more than 60% had cut staff numbers and over two thirds said it had undermined their ability to trade.

‘The poor availability of bank credit is undermining stock levels and retail employment. We understand the banks’ current cautious approach to lending, but there’s no reason why they need to stop loans to fundamentally sound businesses,’ added Ms Milne.

Bank of England figures earlier this week showed that annual lending to businesses had slumped for the first time in more than a decade.

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