Britain's regulators should tone down their attacks on the banks, slow the introduction of new financial rules and clarify the future structure of the industry to encourage lending and stimulate growth, says John Gieve.
The scheme, which began in August last year, was designed to encourage banks to lend more money, both to individuals and businesses.
But the Bank of England has announced that net lending fell by more than £2.4bn in the final quarter of last year.
However, UK banks have taken up nearly £14bn since the scheme started.
Lloyds was amongst the banks that lent less, while Barclays lent more.
By Matt Scuffham LONDON (Reuters) - Britain's flagship scheme to encourage banks to pump more credit into the economy failed to boost lending in its first year, data showed, as banks focused on meeting tougher capital demands from regulators instead. However banks using the scheme expect lending to individuals and businesses to pick up over the rest of this year as economic conditions start to improve, the Bank of England said on Monday. The government launched the Funding for Lending Scheme (FLS) in July 2012 as part of its efforts to lift the economy out of recession. ...