Calls for chancellor to kick-start lending

It is hoped that Chancellor Alistair Darling may help the nation’s small and medium-sized companies’ credit which would be the first signal that the £37bn bank bail-out has not been a success in helping the real economy.

It is both predicted and hoped that the Chancellor is going to bring in measures that will help companies to protect themselves against the loss of insurance, as well as providing and extending a government scheme for loans that are then guaranteed by the taxpayer for up to 75 percent, so that credit risk is reduced.

The transfer of liquidity to the major banks was hoped to kick-start the real economy, although this is not the reality as the aim was that over the next three years, banks would increase the availability of loans to homeowners and small business to get back to the levels and freedom of 2007.

Although this was a bold call and seemingly politically sensitive, the call has been largely ignored and has caused displeasure to the public who have given so much, yet the banks have failed to come up with their side of the bargain.

It also does not mean lending at the same margin over the Bank of England’s policy rate or Bank Rate, due to the fact that small business loans have recently soared, hence the need for intervention.

Story link: Calls for chancellor to kick-start lending