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Chancellor urged to act on business lending

Date Added: 19/03/2013  

The Forum of Private Business has called on chancellor of the exchequer George Osborne to take measures to improve business lending in his upcoming Budget speech.

Programmes such as the Funding for Lending Scheme (FLS) - launched by the government and the Bank of England last year - have failed to get the flow of credit moving from the banks to small to medium-sized enterprises.

The government has indicated it is going to assess the scheme to place more of a focus on business lending. It has been a success in increasing mortgage lending, but loans to companies were down by £2.4 billion during the final quarter of 2012.

Head of policy for the Forum of Private Business Alex Jackman stated a business-focused Budget has to be delivered by Mr Osborne if the UK's economy is to return to growth.

It contracted in the last quarter of 2012 and if there is no growth between January and March this year, the UK will go into a triple-dip recession.

"Budgets are never an event to fly under the radar but this one is significant. While our members support the overall approach of the chancellor's speed of deficit reduction, without doubt they need some cash flow favours on Wednesday," said Mr Jackman.

He added: "Business rates and fuel head the list of businesses biggest costs and some longer term certainty - rather than incremental postponements - over both of those would help enormously."

The Forum of Private Business representative accepted he does not know how the chancellor can improve the FLS, which was set up in 2012.

Speaking to fellow MPs in the House of Commons last week, Canterbury and Whitstable MP Julian Brazier called for the government to boost business lending by selling off the banks.

He was quoted as saying by This is Kent that the Conservative-Liberal Democrat alliance must make sure small companies can grow, as this will provide a boost to the economy as a result.

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Posted by Julie Cutts

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