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Business lending scheme 'will not dig Britain out of recession'

Date Added: 07/08/2012  

The new business lending scheme announced by the government and the Bank of England may not go far enough to boost the economy and provide help for the nation's small firms.

According to Dave Howells, chairman of Swansea-based commercial air conditioning specialists Ultra Cool, any move that aims to improve the flow of credit to organisations has to be welcomed by those in the world of business.

But he told Wales Online that he does not believe the Funding for Lending Scheme (FLS) alone is going to be enough to drag the UK out of the biggest double-dip recession for decades.

"Small businesses will look interestedly at the initiative but won't put out the bunting until they see what’s actually on offer," Mr Howells was quoted as saying by the news provider.

Doubts over the success of the FLS were also expressed by Simon Tee, senior partner at Newport-based accountancy specialists Kilsby & Williams, who noted it will need to be attractive to the banks if it is to work for small to medium-sized enterprises.

"At first sight this looks promising. However, there are no guarantees that the banks may just use this scheme to widen their margins and it does not appear to address the core problem of their overall reluctance to lend," he said, highlighting the fact that over the course of the last few years, banks have become increasingly reluctant to lend out money when there are risks involved.

Liz Maher, director of Newport-based Centurion VAT specialists, suggested there will be many firms up and down the country that are in a good position to take advantage of the business lending scheme, noting the country remains some way away from restoring growth to the economy.

Director-general of the Confederation of British Industry John Cridland is among those who have come out in support of the FLS in recent weeks, explaining the programme is expected to supersede the National Loan Guarantee Scheme in the coming months and years.

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Posted by Miles Pritchard

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