LONDON – Bank credit is now more popular with big companies in Britain than at any point in the past five years, a survey showed on Tuesday, suggesting an easing in what many see as a major brake on the economy.
The Bank of England and politicians say a lack of bank lending, especially for smaller firms, is part of the reason for the country's very slow recovery from the financial crisis.
That problem seems to be fading, at least for business heavyweights.
Banks are an attractive source of credit according to 67 percent of chief financial officers polled by professional services firm Deloitte. That is the highest level since the quarterly survey started in the third quarter of 2007.
"Reduced stress in financial markets, especially in the euro area, has delivered improvements in credit conditions for big UK corporates," said Ian Stewart, chief economist at Deloitte.
"It is a measure of the change that CFOs now rate bank borrowing as offering a more attractive form of finance than at any time since the start of the financial crisis."
Lower costs and improved availability of credit have ensured that raising debt through bond issuance or bank borrowing remains the most attractive form of financing for Deloitte's panel of large corporates, the report said.
Deloitte polled 120 senior financial executives at major companies in Britain between March 14 and 28.
If smaller firms had been polled, the findings might have been different.
Government-commissioned research unveiled on Friday found that low-risk small businesses seemed to have borne the brunt of banks' "credit rationing", which took place through higher overdraft interest rates and outright rejection of loans.
The report by the National Institute of Economic and Social Research, Britain's leading macroeconomic think tank, said the country's banks were less willing than before the financial crisis to take the risk of lending to small businesses.
Fears that firms were being starved of credit prompted the government and central bank last year to set up the Funding for Lending Scheme, which offers banks cheap finance if they maintain or increase lending to households and businesses.
But banks say that weak lending growth is largely due to firms' unwillingness to invest in an uncertain economic climate, not a reluctance to lend on their part.
(Reporting by Olesya Dmitracova; Editing by Catherine Evans)