Brexit fears not weighing heavily on bank lending

It is generally accepted that the main channel through which uncertainty ahead of the EU referendum will hit the economy is the negative impact on business investment. But on the whole, last week’s Bank of England Credit Conditions Survey gave some reasons for optimism.

For a start, the availability of bank credit to firms is increasing. And although demand for bank lending has waned, this is expected to be only temporary. In any case, firms are not dependent on bank lending to finance their spending anyway. Corporate bond issuance has been strong recently too. We think that bank lending will provide further support to the recovery this year.And in the near term, credit availability shouldn’t prevent a pick-up in investment.