Link: Banks expect to cut business lending at fastest rate since 2008 crash
Date: 17th October 2019
Media: The Guardian
What happened?
The bank of England made a survey which shows that banks plan to reduce the rating in response to rising defaults and a fall in demand.
Whom and where it affects?
It affects banks and individuals. Banks have seen the biggest collapse in demand from commercial property companies. On the other hand, individuals are expected to find it more difficult to get credit over the next three months as banks and building societies cut the length of interest-free period on new credit card lending.
Apart from the reasons just explained, british businesses will be affected because of Brexit, a phenomenon that is growing in the United Kingdom.
What sort of public or private institutions are involved?
The first involved is the Bank of England because they made the survey. Second, the banking sector because it is the one that is going to cut its lending to businesses. Finally, the lenders, who were asked to answer several questions in order to have this survey made.
Why is it important for Banking and Finance?
It is important for banking and finance because the finance industry, as the figures revealed, shows an increasing caution across it. With money so cheap, there is a lot of debt out there and the worry is that for some people it is starting to be reflected in their daily life.
What do you think will be the consequences in the foreseeable future?
As a consequence, we can say that default rates are going to increase slightly which may lead to bankruptcy. This will affect not only the United Kingdom but will also spread to Europe and, in a long term, the rest of the world. Not to say that the first affected will be the citizens, who are going to have financial problems with their repayments.
Key words:
Default, bankruptcy, loan, debt, lenders, mortgage, Bank of England