UK Finance has released its latest Business Finance Review which reports on the finance needs of small and medium-sized enterprises (SMEs) in the fourth quarter of 2023 and the year as a whole.
Demand uncertainty, higher interest rates, and the impact of lending taken out during the pandemic all contributed to weakness in gross lending in 2023. However, the decline in gross lending over the previous five quarters came to a halt in the final months of 2023.
Our fourth quarter data contains promising signs that SMEs are planning for the future and have more confidence to take on new or additional finance.
The second half of 2023 also saw greater sector variation in lending patterns. The manufacturing and agriculture sectors reported two consecutive quarters of increased borrowing in Q3 and Q4, with only real estate and construction continuing to see falls in borrowing throughout the second half of 2023, amid sharp falls in house building activity.
