Barclays plans to increase lending to small and medium-sized businesses by ten per cent next year, the bank said yesterday.
It announced it decided to make a further £1.5billion available in 2009 on top of the £15billion already lent.
The move comes as banks face pressure from the government to increase lending to help businesses and individuals overcome the credit crunch.
“Especially during this time of uncertainty Barclays is committed to lending to and supporting business customers,” Barclays chief executive, John Varley, said.
The bank said it would allow British small businesses to use its CreditFocus credit checking service free, regardless of whether or not they were Barclays customers, enabling them to check the creditworthiness of up to five customers or suppliers.
Yesterday’s announcement followed a prediction by Mr Varley at the weekend the UK recession is set to worsen.
Speaking in a TV interview, he said house prices are likely to fall between ten and 15 per cent next year and that the unemployment rate may top seven per cent.
Barclays had expected UK property prices to slide by about 25-30 per cent between 2007 and the end of 2009 said Mr Varley. “We’re probably about halfway through that period, so in other words we’ve got another 10-15 per cent to fall between now and the end of next year,” he added.
Mr Varley also said joblessness was likely to top seven per cent in the next 12 months or so and could hit 7.5 per cent, with the numbers of those out of work possibly being worse for part of 2010 than in 2009.
“I think an additional 700,000 people unemployed over the course of the next 12 months is certainly possible to contemplate,” he said.
Barclays expects the UK economy to contract in 2009, but to start growing again in 2010. There was “no doubt” that banks played a role in bringing about recession and should apologise for it, although central banks and governments were also to blame.
“The banks have to be prepared to have the humility to acknowledge that and accept it and to say ‘sorry’,’’ he said.
Mr Varley said Barclays rejected government financial help due to the bank’s desire to remain independent and to maintain its international growth prospects.
“If British taxpayers’ money is going to be deployed in a bank as a result of the government owning shares in that bank, then a big part of the agenda of that bank and a lot of that incremental capital has to be directed at the UK.
“Our UK business is extremely important to us, but we employ more people outside the UK than inside the UK, we have more customers outside the UK than inside the UK, and it’s very important to me that that agenda of growth outside the UK is unimpaired.”