Bank lending to business in the UK is set to go up for the first time in four years, according to research from Ernst & Young.

E&Y's ITEM Club outlook survey for financial services shows that lending to corporates dropped by 5% last year, hitting the lowest level since 2006. However, the outlook is now improving with lending expected to grow by 3% to £440bn in 2013 and by 8.5% to £477bn in 2014.

Andy Baldwin, E&Y head of financial services in EMEIA said: 'Our analysis suggests the main drivers of banks' return to lending will be better access to wholesale funding and a decrease in non-performing loans, rather than the Funding for Lending Scheme making a material difference.'

E&Y's research suggests total loan write-offs will fall to 0.56% of total loans in 2013 (£9.3bn), after peaking in 2012 at £11.6bn. By 2016 write-offs will make up just 0.34% of total loans. However, the firm cautions that low interest rates remain a key factor in this. However this forecast is dependent on the interest rate remaining at the current low level.

Baldwin said: 'It wouldn't take a significant shift in interest rates to increase the repayment burden of families and businesses across the UK, at great social cost and with a detrimental knock-on effect on lending.'