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p>So there you have it: the Funding for Lending scheme - the joint initiative of the Bank of England and HM Treasury - appears to have been a bit of a flop since its launch last year.
In total, the 40 participating lenders have drawn down some £16.5 billion from the scheme since launching last August. That's no small amount, so how much lending do you think this triggered? £5 billion? £10 billion? £16.5 billion?
Wrong, wrong and wrong again. Net lending to UK households and businesses since the launch of the FLS in August 2012 has actually contracted by £1.8 billion.
Basically, the UK's major financial institutions have been borrowing lots of cheap cash but have failed to do the one thing they were meant to do with that cash:lend it out to businesses and households in order to get the economy firing once again.
In fact, of all the major banks, only Barclays has actually extended its loan book since the launch of the FLS - a rare ‘well done’ to a high street institution. Lloyds, RBS and Santander - by contrast - have borrowed funds, but are all lending less than they were a year ago.
It's fair to say that the Funding for Lending scheme has almost certainly helped bring rates down across mortgages - it would be hard for it not to, given the low cost of the money the banks are borrowing.
This scheme was never really about reducing borrowing costs and making money cheap, though. It was all about getting more money lent out to businesses and homeowners and this simply hasn't happened.
The scheme has now been extended until the beginning of 2015 and rightly so, with nobody banking on the banks lending in any material way anytime soon.
The FLS launched to great fanfare last year, but it may yet turn out to be just another ‘Project Merlin’. Remember that?
So there you have it: the Funding for Lending scheme - the joint initiative of the Bank of England and HM Treasury - appears to have been a bit of a flop since its launch last year....
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