The Bank of England’s latest “Trends in lending” report paints a subdued picture of credit conditions in the UK. The overall stock of lending continues to fall, particularly for small and medium-sized businesses.

A section of the report on banks’ liabilities, meanwhile, gains extra significance in light of the stubbornly high inflation data released last week. Savers, desperate to keep up with inflation, much less earn real returns, are increasingly squirreling away their money in higher-yielding time deposits with longer maturities. (Guaranteed inflation-beating national savings certificates were recently withdrawn, which makes Buttonwood’s blood boil.)

The share of fixed-rate retail deposits of one year or more has doubled over the past two years. The Economist Intelligence Unit does not expect the Bank of England to raise its policy rate from the all-time low of 0.5% until late this year, prolonging savers’ desperate search for yield for some time to come.

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