Coalition tackles bank lending

Monday, 26 July 2010 11:40 AM

By politics.co.uk staff

The government's plans to encourage more lending by banks have avoided confrontation with the City, preferring "market-led solutions" to direct government intervention.

Reluctance by banks to make finance available to British businesses is widely understood to be a key reason for the ongoing stagnation of the economy.

Today's green paper seeks to address the problem, but does not contain much of the "carrot and stick" approach advocated by business secretary Vince Cable before its publication.

The consultation explores a number of options, including more use of equity and encouraging venture capital to invest in a wider range of businesses.

Dr Cable had told the Sunday Times newspaper that "combinations of carrots and sticks" could be employed against the banks.

But announcing the consultation today he adopted a more conciliatory approach.

"I've heard the problems businesses are facing in getting bank loans up and down the country," he said.

"They need innovative ways to access finance from other sources to grow our firms and economy."

Tags:
• banking crisis
,
• economy
,
• economy and finance