Fears that a lack of credit could hamper Britain’s emergence from recession were heightened yesterday as bank lending to businesses fell in April and a Bank of England official raised concern over access to finance for small businesses.

High street banks received more in repayments than they lent out to businesses last month, figures from the British Bankers’ Association (BBA) show. Non-financial companies made net repayments of £2.3 billion in April, while financial companies repaid a net sum of £17.6 billion, although this figure was boosted because many companies repaid short-term loans taken out several months ago, the BBA said. Companies have made net repayments in three of the past six months.

Howard Archer, chief UK and European economist for IHS Global Insight, said that although the figures were dragged down by a reduced demand by businesses for bank financing, they “also reinforced the concern that credit conditions remain very tight and a serious obstacle to recovery prospects”.

The dismal figures came only days after Charles Bean, deputy governor of the Bank of England, said that the central bank was concerned about the difficulty that small businesses were having in obtaining credit. “The group we have most concern about is the small and medium enterprises, which are typically very reliant on banking finance,” Dr Bean told The Star newspaper, of Sheffield. “We do recognise there are serious issues we need to continue to work to try to address, but it is not something the Bank of England can do. We cannot compel banks to do anything.”

David Dooks, the statistics director of the BBA, said that the value of bank lending to small businesses was 5 per cent higher than at the same time last year. He said: “All lending figures at the moment are reflecting the economic environment and the difficult trading conditions for small businesses.”

Dr Archer said that the gloomy figures raised the likelihood that the Bank would eventually pump even more money directly into the economy. “[The figures] heighten belief that the Bank will eventually extend its quantitative easing programme further still, following May’s £50 billion extension to £125 billion.”

The news for homeowners was slightly more upbeat as the number of mortgages granted to those buying new homes edged up to 27,685 last month, from 26,671 in March and significantly higher than the six-month average of 23,812.

However, the number of loans approved by high street banks, which account for nearly 75 per cent of the mortgage market, was still 15.5 per cent down on April last year.

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