Borrow to invest and grow. It is a simple Keynesian message that is undermined by survey data published on Wednesday by the Bank of England.
The survey says British banks plan to cap their lending to companies in the second quarter as much as they did in the first, despite a probable increase in demand.
For small companies the situation is dire and, unfortunately, getting worse.
A look back at recent trends tells us why. During the last couple of years banks have withdrawn more from the economy than they have put in. They blamed a lack of demand. In truth, they were busy meeting the requirements of government and regulators to shed bad debts and boost their reserves. Big companies, starved of bank loans, got round the problem by borrowing directly from the international money markets. They issued bonds which were bought by investors.
But in recent months bond issuance has declined sharply.
According to Syscap, an independent finance provider, corporates are now repaying far more money to bondholders than they are raising in new bonds.
Net repayments totalled £19.6bn during 2012, which means that almost £20bn was taken out of the economy in a year when it was hoped private sector borrowing would grow. This compares with net issuance of £90.7bn in 2008 at the peak of the financial crisis.
As the company says: "This matters to small and medium-sized enterprises (SMEs) because larger corporates staying out of the bond markets and opting for shorter-term borrowing instead pushes SMEs lower down the pecking order when it comes to securing bank loans."
So when the Bank of England reports that banks, looking forward to the summer, are unwilling to change their parsimonious behaviour, we know the little they are willing to lend is going to be hoovered up by large firms at the expense of the small.
And it is borne out by the central bank's own survey, which found banks had a low tolerance for risky loans to small firms.
Lenders still argue demand is low from the small business community, but it seems that the Bank's flagship Funding for Lending Scheme, which is designed to increase the overall level of lending by £80bn via cheap rates to all-comers, has achieved little for small businesses so far.
The survey says British banks plan to cap their lending to companies in the second quarter as much as they did in the first, despite a probable increase in demand.
For small companies the situation is dire and, unfortunately, getting worse.
A look back at recent trends tells us why. During the last couple of years banks have withdrawn more from the economy than they have put in. They blamed a lack of demand. In truth, they were busy meeting the requirements of government and regulators to shed bad debts and boost their reserves. Big companies, starved of bank loans, got round the problem by borrowing directly from the international money markets. They issued bonds which were bought by investors.
But in recent months bond issuance has declined sharply.
According to Syscap, an independent finance provider, corporates are now repaying far more money to bondholders than they are raising in new bonds.
Net repayments totalled £19.6bn during 2012, which means that almost £20bn was taken out of the economy in a year when it was hoped private sector borrowing would grow. This compares with net issuance of £90.7bn in 2008 at the peak of the financial crisis.
As the company says: "This matters to small and medium-sized enterprises (SMEs) because larger corporates staying out of the bond markets and opting for shorter-term borrowing instead pushes SMEs lower down the pecking order when it comes to securing bank loans."
So when the Bank of England reports that banks, looking forward to the summer, are unwilling to change their parsimonious behaviour, we know the little they are willing to lend is going to be hoovered up by large firms at the expense of the small.
And it is borne out by the central bank's own survey, which found banks had a low tolerance for risky loans to small firms.
Lenders still argue demand is low from the small business community, but it seems that the Bank's flagship Funding for Lending Scheme, which is designed to increase the overall level of lending by £80bn via cheap rates to all-comers, has achieved little for small businesses so far.
