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U.K. Business Lack Faith In Banks, Says BBC Finance Survey

The faith that U.K. firms have in banks has deteriorated in the last year, acc

The faith that U.K. firms have in banks has deteriorated in the last year, according to the results of a finance survey recently conducted by the industry trade organization British Chambers of Commerce (BCC).

Survey Results

The survey indicated that 50 percent of respondents do not trust lending institutions and building societies, and 38 percent have less trust in these organizations than they did one year ago.

Almost half of all participants indicated that they seek out these financial institutions for external finance, while 10 percent use equity and a mere 8 percent satisfy their financial needs through the use of angel investment, grants, venture capital, peer-to-peer lending and private equity.

While 57 percent of people taking part in the survey stated they are optimistic they could obtain the external finance they need, 37 percent do not have this confidence.

Government-Backed Finance

In addition, 59 percent of companies participating said that they would feel more optimistic about obtaining financing from a government-backed lending institution. More-than two-fifths, or 43 percent of respondents, specified that they had not heard of government-backed finance schemes when asked about these constructs. A larger percentage of newer businesses and micro firms participating indicated they did not know about these financial institutions than other market participants.

John Longworth, Director General of the BCC, said in the statement that "as we approach the end of the party conference season, Britain’s politicians must stop scoring points against each other and start scoring points for economic management, starting with the thorny problem of business access to finance."

In providing specific recommendations, the director general stated that "financial institutions need to rebuild trust and repair damaged relationships with businesses and improve transparency. Regulators should look to increase competition in the banking sector to ensure businesses have more choice, and the government must ensure that plans to create a British Business Bank mean more funds available to growing businesses. Six in [10] companies would feel more confident in seeking finance if Britain had its own dedicated business bank."

While the BBC finance survey reveals that a large amount of U.K. firms do not trust lending institutions, a recent poll conducted by a global recruitment consultancy revealed that one-third of executives working at companies contained in the FTSE 350 Index either have plans to stay for less than a year or are looking for the next job.