7
Dec
Chancellor looking at new bank lending scheme
The Chancellor of the Exchequer George Osborne has said the
government is looking to join forces with banks to lend money to
businesses.
He was speaking at the House of Commons Treasury Committee to
answer questions about last week's Autumn Statement.
It said economic growth was slowing, government borrowing was
rising, and unemployment will continue to increase.
The Chancellor said he is looking at a credit-easing scheme for
businesses, but gave no details.
He admitted there was issues over lending to small firms.
Mr Osborne said: "There is a disconnect from what you hear from
the banks and what you hear from the small business community.
"I'm sure of course there's an issue with demand. Some
businesses are just nervous. But I think there's also a lack of
supply. I think there is a lack of competition."
Eurozone impact
Last week, the independent Office for Budget Responsibility (OBR)
slashed its UK growth forecasts, to 0.7% for 2012 from a March
estimate of 2.5%.
Speaking to the committee, the Chancellor said: "There is a very
significant downside risk to this forecast from the ongoing
situation in the eurozone.
"If the euro crisis deteriorates, if that leads to further
deterioration in conditions in financial markets, that will have a
significant impact on our economy."
But he added he would not seek tax cuts to kick-start the
economy.
Mr Osborne said: "You would hazard your chances out on the
international debt markets to pay for that tax cut."
He added that he will officially reply to the Vickers report on
banking reform in a House of Commons statement on 19 December.
The report suggests the ring-fencing of banks' High Street
divisions to protect them from riskier investment arms and
establishing 'cash cushions' to protect against further losses.
The 2012 Budget will be unveiled on Wednesday, 21 March.
source: http://www.bbc.co.uk/news/business-16071853
Wednesday 7th December 2011