Bank lending to businesses and home-buyers remains weak and, on one measure, has fizzled out since the pickup in March, the Bank of England warned yesterday. It said that lending to large and small companies was weak, while spreads – the cost of borrowing above base rate – and fees continued to go up.
And as long as banks continue to not lend, demand will continue to fall. We are headed for a deflationary spiral, if we're not already in one. Banks won't lend because they see how truly stagnant our wages are and wages won't go up because consumers want the cheapest product.
We may have some commodity-based inflation due to a weaker dollar driven by government debt, but even mighty oil succumbed to weak demand after last summer.
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