The flow of lending to British businesses picked up in November for the first time since January 2009, Bank of England data showed on Thursday, indicating credit conditions may be starting to stabilise.
UK bank lending to businesses rose by 0.1 billion pounds in November after a 4.2 billion pound decline the previous month.
"The BoE will see the pick up in lending as good news but it's hard to say if this marks the start of an upward trend," said Alan Clarke, UK economist at BNP Paribas.
Separate figures showed M4 money supply fell by 1.1 percent on the month in December, the biggest monthly drop since records began in August 1982.
Analysts said it was hard to read too much into these figures, which can be distorted by flows within the financial sector. The BoE prefers to look at a money supply gauge which excludes these distortions — M4 excluding intermediate other financial corporations — which will be published on Feb. 1.
"It's a big month-on-month drop but it's not easy to draw conclusions from it," said Clarke.
The flow of lending to businesses has fallen sharply for most of the past year as firms have used funds raised on capital markets to pay down bank debt.
In percentage terms, lending was down 7.6 percent on the year, matching October's reading which was the biggest annual fall since records began in 1999. Moreover, data from the major UK lenders indicated that net lending weakened in December.
"The flow of net lending to UK businesses rose in November, though remained subdued," the BoE's Trends in Lending survey said.
"Some business contacts reported a marginal improvement in the availability of credit during the second half of 2009, with conditions reported to have eased more for larger companies than their smaller counterparts."
UK policymakers remain concerned that small companies, which do not have access to international debt or equity markets are still finding it hard to get funding.
The flow of net mortgage lending rose in November but remained well below the average flow for 2008. Gross lending for house purchase increased in December, in part because some homebuyers brought forward purchases before the end of stamp duty relief, the survey said.
