This time last year I wrote a number of articles about the fact that the billions of pounds being pumped into banks would not find their way to home owners and businesses.
Last week my opinion was confirmed to an extent when Lloyds Banking Group and the Royal Bank of Scotland admitted they are failing to hit their lending targets.
This is despite the fact that part of the deal when bailing them out was that they would lend a certain amount to home owners and businesses.
It’s a pretty lame excuse to cite lack of demand as the reason these targets were missed and my view remains unaltered – there simply isn’t enough money in the system to fuel lending demand.
Deposit-takers’ lending activities are restricted by the lack of wholesale funding coming into the UK, while their credit criteria confirm that their appetite for lending is still borderline anorexic.
With spring just around the corner we are likely to see a rise in activity from both businesses and potential home buyers soon.
But I fear lending numbers will not increase and can only guess what excuse banks will come up with for missing another target – lack of demand certainly won’t wash this time.
What we need is some new money in the market rather than a reliance on moving retail deposits from one place to another. This is the only way to get the market moving again.