For the fourth month consecutively, lending to UK businesses decreased and mortgage approvals dipped to their lowest point in more than a year in July, according to the Bank of England. The Banks lending report also showed an additional 1.3 billion drop in lending to UK businesses during June; up from 2.2 billion pounds in May.

Mortgage lending, also hit a new low in a year from the big six banks on High Street. Those six banks, Santander, Barclays, HSBC, Lloyds, Nationwide, and RBS make up the UK’s biggest lenders. Even though only a 2 per cent drop took place, 47,000 mortgage approvals were the tally total in July, the lowest since May of 2009.

The Bank of England remarked on the overall lending numbers by saying, "The stock of lending to all the main sectors of the economy contracted in the second quarter. Net lending by the major UK lenders remained weak in July."

The report also mentioned smaller companies were having a more difficult time getting credit than big firms. This is likely due to the tight lending criteria under what banks are functioning with right now.

The government’s ambitious austerity programme coupled with the tight credit conditions are together major factors in the ability for the economy to experience growth, according to Bank of England policy makers.

The slow pace of money supply growth is yet another concern for the Bank of England. M4 broad money grew almost 0.5 per cent in July. This is up from 0.1 per cent growth in June, initial data showed. However, the annual rate dropped to a less than impressive 2.3 per cent, the lowest since records started in 1983.