Banks are expected to increase their lending as the UK economy swerves the predicted recession and the housing market shows small signs of some revival, according to a panel of leading economists.
Total loans in the UK are expected to rise 1.2% this year – a net increase of £29 billion. This increase comes from a 0.1% fall forecast in February 2023, according to the EY ITEM Club UK Bank Lending Forecast. Falling inflation, lower-than-anticipated energy bills and a resilient jobs market means that GDP is expected to increase by 0.2% in 2023 rather than contracting, driving an increase in consumer and business borrowing.
“With the UK’s improved economic set to see bank lending surging, companies have a new opportunity to invest, grow and develop more sustainable business models,” said Laimonas Noreika, Founder of HeavyFinance. “As the global race to increase low-carbon green investment continues, UK firms need to think again about the steps they can take to reduce CO2 emissions.
“The wider industry needs to consider how to use external finance to further improve key areas like agriculture and farming, modernising processes as well as saving time and money.”