The first phase of the FLS, which ends on 31 January 2014, is unaffected by this announcement.
The FLS has contributed to a substantial fall in bank funding costs since it was launched in July 2012. This has fed through to significant improvements in household credit conditions. Credit conditions for smaller businesses have also improved, but to a lesser extent, and lending to businesses overall remains muted. The FLS extension will therefore provide continued substantial support for lending to businesses in 2014, with incentives in the scheme skewed heavily towards lending to small and medium-sized enterprises (SMEs).