"Financing projects from £50,000 to £100 million"

BCC chief urges new BoE governor to keep economy moving

BCC chief urges new BoE governor to keep economy moving

Business leaders have urged the new Bank of England governor, Mark Carney, to support the £1 billion investment bank and an expansion to the money supply to keep lifeblood flowing through the economy.

Dr Carney took over the role from Sir Mervyn King today, and has already been urged by the British Chambers of Commerce (BCC) to support the Government’s Business Bank, as well as an increase to the quantitative easing programme.

City experts anticipate that the monetary policy committee will hold its course until an August policy review is published, which is expected to encourage a more visionary approach by the bank.

But if Dr Carney follows Sir Mervyn’s support for an increase to the money supply, the respected former head of the Bank of Canada may attempt to rouse colleagues to support this much sooner.

Business chiefs are concerned at figures and recent events which suggest that net lending will suffer as banks look to secure their capital bases.

More details emerged recently from the Prudential Regulation Authority about a £27.1 billion deficiency in the capital requirements of the UK’s major banks and building societies.

The Co-operative Bank has ceased all new commercial lending indefinitely following the disclosure of the substantial black hole in its capital base that caused the bank to withdraw from a deal to buy 631 branches from Lloyds – a project also known as Project Verde (read more).

Barclays, by far the most expansive lender over the past year, has now threatening to rein in lending after it was told that a new 3% “leverage ratio” could be introduced six years ahead of schedule and asked to submit revised plans that will outline how they expect to account for it.

John Longworth, the BCC Director General, said it was imperative that the new Bank of England governor found a way to ensure the flow of credit to manufacturers and SMEs so that the prospects of recovery were not compromised by reticent banks.

"While we are seeing signs of a stronger recovery across the business community, we have no illusions about the challenges ahead for the UK economy," he said.

Monday, 01 July 2013 12:55
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