LONDON, March 4 (Reuters) - British lenders taking part in aBank of England scheme to boost firms' and households' access tocredit cut lending sharply in the last three months, dampeninghopes that the project could help revive economic growth.
The central bank announced the Funding for Lending Schemejointly with the government in June 2012, as a way to unblock acredit log-jam which some economists say is a big factor behindBritain's weak economic recovery.
Banks and building societies cut lending by a net 2.425billion pounds between October and December, in contrast to anincrease of around 1 billion pounds in the first months of theFunding for Lending Scheme's operation, the bank said on Monday.
Total net lending by banks and building societies takingpart in the scheme - which includes all major British lendersapart from HSBC - is now down by 1.502 billion poundssince June 30.
The central bank said that the scheme's benefits will not befully clear until later in 2013.
"I would not expect to see a return to rising aggregatequantities until we start getting data for 2013 at theearliest," said Paul Fisher, the central bank official in chargeof the scheme.