A tweet and article by Chris Dillow alerted me to the Bank of England net lending figures for manufacturing (which only go back to July 2009).
Chris focuses on the comparison between net lending to manufacturing (at £32.5bn, -3.1% 12mo growth rate) and to fund managers (at £92.6bn, 20.9% 12mo growth rate) to say there’s a bias in lending.
That got me thinking about trends in lending for these two sectors.
I was surprised by the results.
Although net lending to fund managers is almost 3x net lending to manufacturers in November 2013, coming out of the recession, net lending to manufacturers was 1.5x net lending to fund managers (£54.3bn vs £37.0bn).
Now surely part of this reflects the financial nature of the crisis: net lending to fund managers is likely just rebounding to pre-recession levels (though its hard to tell, as the data only back to July 2009)
But focus on the net lending to manufacturing numbers, which has fallen by a compound monthly rate of -1.0% since July 2009.
This has left net lending to manufacturing in November 2013 40% below net lending in July 2009.
Business confidence may be returning – and indeed growth in ADS sectors is fairly strong – but given capacity constraints in industry, the weakness in lending is a problem when it comes to boosting business investment.
