The Swiss bank suggested the UK was over ‘its experiment of combining fiscal and monetary austerity’ and predicted £15bn more gross lending in 2013.
Its UK Bank Monitor stated: “Our view is that over 2011-12, the demands placed on the banks to make balance sheets more conservative in a period when funding was expensive and external equity unavailable was bound to lead to declining loans.
“Changing the narrative to one where banks have excess liquidity and wholesale funding – and where they want to lend – should prove powerful.”
UBS, which upgraded Lloyds to ‘buy’ earlier this week, highlighted a greater appetite for lending at the bank as well as the building society Nationwide. It described Funding for Lending as a ‘powerful signal’ that liquidity insurance was back.
However, it argued the need for first-time buyers to find large deposits was a key constraint on any recovery. Calculating it was significantly cheaper to buy than rent, it suggested that should lenders loosen their terms, there would be rising demand for homes.
