Member Article

StartUp Britain campaigns welcomes bank stimulus

The co-founder of StartUp Britain has welcomed the bank stimulus package, announced by the Chancellor George Osborne, last night.

Bank shares have jumped this morning, following the announcement that The Bank of England, together with the Government, will provide billions of pounds of cheap credit to banks to lend to companies.

The move is intended to boost confidence, as Mr Osborne said the measures would protect against the “Eurozone debt storm.

Quantitative easing measures will be replaced with cheap loans to banks, in return for increased lending to businesses.

It is expected to be in place within just a few weeks, and is expected to last four years.

Emma Jones, co-founder of StartUp Britain said: “Small businesses and start-ups in particular have been struggling to find ways to finding the essential funding they need to help their businesses to grow.

“If we are going to be competitive and allow this new crop of diverse businesses to flourish, we need to remove the barriers to growth and seize the opportunity to be ahead of the game, whatever is going on around us.

“Record numbers of people with a bright idea are setting up businesses in this country – more than 400,000 last year. We know this move will be welcomed by them all.”

Chief executive of The Forum of Private Business, Phil Orford, said: “Borrowing costs have been rising while lending has continued to fall, so on the face of it this should be good news for those small businesses struggling to make ends meet.

“We can only hope that the banks now embrace it as an enabler to boost lending, which in turn will help recharge the UK economy and get it growing out of recession.

“The fact is though that the banks have consistently failed to lend fairly since the crisis began, despite a number of state initiatives – the Griggs’ report has only recently highlighted this.

“Here we have another credit easing scheme, albeit on a much grander scale, to get the banks splashing the cash.

“You could argue maybe the Chancellor and the BoE hitting the ‘Plan B’ panic button should have come much sooner.

“But no matter what lending schemes are put in place, nothing will imbue confidence here more than the eurozone sorting itself out.

“That remains the chief issue facing the UK economy at the minute, and no number of lending initiatives here can solve that.”

Graeme Leach, Chief Economist at the Institute of Directors, said: “Facing a bombardment from the euro zone the Chancellor and Governor are calling up the reserves.

“Defensive measures need to be put in place and they’re making sure everyone knows they’ve done it. The extended liquidity and funding for lending schemes are welcome, but limited.

“The liquidity scheme will need to be massively expanded if break-up and contagion spread across the euro zone.

“The funding for lending scheme helps the supply of money and the demand for it, by lowering the cost of borrowing. But the core problem remains. Companies alarmed by the euro crisis will not be eager to borrow regardless of the cost.”

This was posted in Bdaily's Members' News section by Tom Keighley .