n 2007, the base rate of interest stood at 5.5%. By March 2009, the rate hit a record low of 0.5%, where it has stayed ever since. Although the economy is said to be showing signs of recovery, the supply of credit remains intermittent, and not as fluid as the Bank's Monetary Policy Committee (MPC) would have hoped.
Businesses are finding it difficult to bridge the gap between what they need to spend and the cash coming in, but credit facilities are more difficult than ever to secure.
A survey carried out by NMG Financial Services on behalf of the Bank of England concludes that "tight credit supply is likely to have been the dominant influence" on the banks' decision to lend.
If credit is in short supply, loans become more difficult to secure and so there is less cash in circulation; thus preventing economic stimulation.
But banks have never been scrutinised as closely as they are now and since the crisis hit, they are required to hold more cash on their books before providing loans to businesses or private individual.
It does not come as a huge surprise that "tight credit supply is...the dominant influence" as banks look to ensure they are not as exposed as they were when the crisis hit. But businesses will be anxious to get consumers spending again which they will find difficult to do without access to credit in some way. For the latest updates PRESS CTR + D or visit Stock Market news Today
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