Corporate lending by banks is predicted to fall 5.7% in 2012, with small and medium-sized firms expected to find it particularly difficult to secure financing, according to a new study. The Ernst & Young ITEM Club Outlook report says that overall bank lending is set to contract this year for the first time since 2009. Banking lending overall will fall by 2.2%, after expanding by c.4.3% in 2011. Growth of 0.9% is expected in 2013. The contraction in corporate loans is expected to be particularly sharp, with a 5.7% fall forecast for 2012, with financing conditions predicted to be particularly tight in the construction and real estate sectors, and among smaller companies. Neil Blake, senior economic adviser to the Ernst & Young ITEM Club, said: “Funding for small and medium-sized enterprises is likely to be particularly difficult to obtain as banks seek to reduce credit risk. “The average interest rate on smaller loans, of £1m or less, is already double that charged on loans of £20m or more, and we expect this trend to continue. As these young companies tend to be high-growth businesses, this will have adverse knock-on effects for economic growth.”