Businesses are still no better off despite lenders drawing billions from a flagship scheme designed to revitalise Britain’s economy.

Banks and building societies taking part in the government’s Funding for Lending Scheme (FLS) shrunk net lending by £300 million in the first quarter of the year, although the pace of lending decline eased from three months earlier.

Part-nationalised Lloyds Banking Group loaned almost £1 billion less during the quarter, despite having borrowed £3 billion from the Bank of England and Treasury scheme

Taxpayer-backed Royal Bank of Scotland also shrunk its net lending by £1.6 billion in the quarter, but has borrowed £750 million from the scheme.

The Bank said lending to homeowners has been positive but continues to fall to business. It said it would ‘take time’ for the scheme to feed through to bigger lending volumes.

The 40 participating lenders have so far drawn £16.5 billion from the scheme…

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