We are not out of the woods yet

The Bank of England has kept interest rates on hold. It has also left its target for Quantitative Easing unchanged. Neither decision was unexpected following news that lending by banks to businesses dipped in April while lending to individuals rose slightly.

David Kuo, Director at the financial website The Motley Fool - Fool.co.uk, says: "It appears that high street lenders are still walking on egg shells. This month, lending to consumers increased by £1.3 billion, but businesses have repaid almost £5 billion.

"It is difficult to gauge from a couple of months' figures how lending would have fared without the introduction of Quantitative Easing. That said, businesses have been repaying debt, and consumers should do likewise.

"Lending to non-financial companies has retreated to levels last seen in December 2008 as businesses pay back loans. Businesses are battening down the hatches and so should we.

"We are not out of the recessionary woods yet. In fact, the road to recovery is seldom clearly labelled, and any signposts we do see can give conflicting signals. This is no time to be complacent."