It is one of the age old questions. How much is 'a LOT'? In terms of Magnums eaten at a single sitting by a lonely person, it is four. Goals conceded by a south coast team at Old Trafford? It appears to be nine. Numbers of toilet rolls stored in a lock-up in a suburb of Burnley? 40,000.
When it comes to the amount companies have borrowed to keep afloat and wait for the good times to re-start, it seems the number is more than £60 billion, according to forecasts that lay bare the precarious state of corporate Britain’s finances, which were already naked and completely embarrassed, writhing as they were in the middle of a high street in Devon.
The EY Item Club (where you can sit in a comfy Chesterfield chair and get a good cup of Earl Grey, with lashings of good advice) found that the net lending to non-financial firms jumped to £35.5 billion in 2020, from a net £8.8 billion in 2019, as companies scrambled to secure emergency government-guaranteed loans from banks.
That's not £60 billion.
Shut up for a moment. The EY Item Club forecast that bank lending to businesses, including through the Government schemes, would increase by 5.4 per cent this year, which equates to an extra £26 billion net of repayments. See? £35.5 plus £26 billion. A LOT. It has all been about shoring up leaky balance sheets, whilst furloughing the right people, avoiding eye-contact with landlords and not listening to the deepening gloom on the airwaves as the weeks turn into months. It will soon be time to think about starting to repay some of those loans and we in the glorious profession know this is a time we need to have our phones fully charged.
However, in a rather odd about-face, net lending through personal loans and credit cards declined by 9.9 per cent last year, the biggest fall since records started in 1994, and went negative. About £3.9 billion of consumer credit was repaid during the final quarter of last year, while households’ bank deposits surged by £141 billion between March and December, compared with £42.5 billion in the same period a year earlier.