Selasa, 26 Juni 2012

Bank of England casts doubt over loan scheme

Bank of England casts doubt over loan scheme

By Hugo Duncan And Becky Barrow

PUBLISHED: 17:19 EST, 26 June 2012 | UPDATED: 18:09 EST, 26 June 2012


The Bank of England yesterday admitted that the latest plan to tackle the lending drought crippling the UK economy might not lead to an increase in loans to small businesses.

Governor Sir Mervyn King promised that the incentives offered in the ‘funding for lending’ scheme would be so attractive it would ‘hit banks in  the face’.

But asked by MPs on the Treasury Select Committee if lending would increase, he said: ‘I can give no guarantee. That will depend on what happens in the world economy and the impact of that in the UK.’

Enlarge   Sir Mervyn King: Pulling out all the stops

Pessimistic: The Bank of England governor said he couldn't guarantee that lending would increase

His comments cast doubt over whether net lending will increase by 5 per cent or £80bn a year as planned.

Labour MP George Mudie said: ‘With Merlin we were sold a pup and with this we want expanded lending. Anything short is going to let a lot of people and businesses down very badly.’

The scheme â€" which is due to be up and running within weeks â€" will see banks get money at ultra-low rates on the condition they pass it on to businesses and households.

King insisted the scheme was an improvement on the much-maligned Merlin deal â€" which saw lending fall â€" because it ‘puts money on the table’ and provides a strong incentive for banks to lend. ‘It will hit them in the face,’ he said. ‘The more they expand lending the cheaper it will be to borrow from us.’

The Bank is also offering UK lenders £5bn a month of cheap loans to protect them from the financial storm raging in the eurozone.

The Governor â€" who warned that Britain is not even halfway through the economic crisis â€" hinted that there would be further moves to boost lending this week.

The Bank is widely expected to use its financial stability report on Friday to allow UK banks to free up billions of pounds from their cash buffers to help drag the economy out of recession.

It also looks set to unleash another round of quantitative easing next week on top of the £325bn freshly-printed cash it has already pumped into the economy.

King yesterday raised the possibility that interest rates could be cut again having been at a record low of 0.5pc since May 2009. Nawaz Ali, an analyst at currency experts Western Union, said: ‘The Bank is ready to pull out all monetary stops to defend Britain from Europe’s unrelenting nightmare.’

It came as Government figures showed a previous scheme to boost lending â€" the £20bn National Loan Guarantee Scheme or ‘credit easing’ â€" had a slow start.

Since its launch in March, around £1.68bn was handed out to 10,000 small firms.

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The Euro is almost finally over, the inevitable will happen soon (within the next 4 or 5 months) Either Greece, Spain, Italy, portugal or Ireland will leave the Euro (Maybe all, maybe some) OR Germany will leave. Germany are manufacturing exporting goods at way below their true value. They are propping up an economy that is hugely over valued. The Euro should be nearer 1.5-1.75=£1. Germany have crippled the rest of Europe as their economy and output is far too strong for the likes of Greece and Spain. They need to get back to their DM and end all this Austerity, question is how exposed are we to an Economy that without Germany will be worthless? Now is the time to watch the ££££ soar against the Euro. Mervyn King, Obama and Merkel wont be able to contain Apocalyptic bomb that is just about to explode!

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Merv don't you think it's time to retire mate or do you want to die at work besides your keeping a younger person out of a job

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You have idiots running the bank, you really think the banks will lend more, I think he doth jest.

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Trying to get anything out of the bank is a waste of time, hard enough getting my own money from them let alone a loan of any kind for my business

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Cheap loans at ultra low rates to the banks, but will this translate in to cheap loans to their customers? , somehow I doubt it.

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