Loan guarantee scheme
Yesterday, the Chancellor’s announcement about a £40 billion loan guarantee scheme to make it easier to access credit for businesses. It was the good news designed to soften the bad news. This belated move to address the credit crisis for medium and small businesses follows the announcement last week. The announcement is about a £1bn scheme to help young unemployed people into work. It is a new scheme to a boost to housing in Wales and England and lever private investment into building public infrastructure from pension funds.
Today, the Organization for Economic Co-operation and Development expects the UK will head back into the independent Office for Budget Responsibility (OBR) also downgrades its predictions for economic growth (for the fourth time) and recession in the first six months of 2012. OBR need for measures becomes undeniably urgent. The loan underwriting program is designed to ease access to credit for businesses. It is initially for £20bn. It is a promising move to break the impasse between businesses unable to access the capital they require and the risk-averse banks to compete successfully with as many as one in five company loan applications that still being turned down. It must be implemented widely and swiftly.