This article was last updated on April 16, 2022
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The Bank of England has announced it will end Funding for Lending Scheme (FLS) in 2014 to shift its focus towards business lending.
FLS was launched in July 2012 to boost mortgage lending to households and the scheme remains successful as it brought an improvement in a stagnant property market which is still continuing to progress.
The scheme has now considered to be curtailed now to solely focus on enabling greater lending to small firms that are having difficulties with borrowing as house price inflation looks set to accelerate further.
BoE Governor Mark Carney has said on Thursday that an overheated housing market would be a risk to the economy. And mortgage lending was “no longer necessary” any support.
Mr. Carney has also addes: ‘Although the growth in household loan volumes remains modest, activity is picking up and house price inflation appears to be gaining momentum.’
Chancellor, George Osborne – who is also supportive of the new scheme, is also aware of the importance of the role of SMEs as he has said: “Small firms are the lifeblood of our economy. That’s why we’re reforming the banks, introducing the employment allowance and now focusing the Funding for Lending Scheme to support them.”
The scheme intended to provide up to £60bn to banks and building societies so long as that money was lent to businesses and individuals.
National chairman of the Federation of Small Businesses, John Allan has said to be surprised by the announcement and said the fresh move “will make a difference to lending to thousands of our members and millions of small firms. It is something the FSB has raised with the governor of the Bank of England and he is clearly listening”.
Mr. Allan has also told Mr. Carney’s new step is encouraging for the better of economy as the contribution small firms make to job creation cannot be overlooked in any manner.
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