Bank lending to British businesses has fallen to its lowest level for nearly 30 years, as weak economic growth and tighter regulation on lenders sap credit for small firms in particular.
British bank lending to non-financial companies fell to 59 per cent of UK GDP in the third quarter of 2025, a level last seen in 1998, according to new research from Boston Consulting Group. At its peak in 2008, bank lending to businesses was about 90 per cent of GDP.
Small and medium-sized enterprises were disproportionately affected, with Bank of England data showing that SME loans almost halved over the past 15 years from 12 per cent of GDP in 2011 to 6.5 per cent in 2026. Banks have pivoted away from SME lending, which can be riskier and less profitable because of the work necessary to run due diligence on smaller firms.