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Business lending scheme 'will succeed'

Date Added: 15/10/2012  

The deputy governor of the Bank of England has insisted the latest scheme to boost business lending in the UK is going to be a success and stated he is "pleasantly surprised" with the number of building societies and banks that have already signed up to take part.

Paul Tucker, speaking at a banking conference in Tokyo organised by the Institute for International Finance, stated he has confidence the programme - which was launched by the Bank of England and the coalition government in the UK - is going to work.

It has been claimed by policymakers at the Bank of England that if the Funding for Lending Scheme turns out to be a success, it may reduce the need for it to buy further government bonds under its quantitative easing scheme, which has been criticised by many.

"There are no silver bullets. Of course there is weak demand for credit but where we can remove impediments to the supply of credit we should do so," Mr Tucker said.

The Funding for Lending Scheme was launched by the government and the Bank of England only two months ago, but Mr Tucker stated it has already resulted in a fall in funding costs.

"I am reasonably confident this will be passed on to the real economy over time," he told the conference in Japan on Friday (October 12th).

The UK's economy is currently in the deepest double-dip recession for decades and many small firms have needed to take company debt advice in order to stay alive during the economic upheaval seen in the country in recent years.

According to research recently published by insolvency trade body R3, as many as a third of the UK's pubs are facing having to close down due to the state of their finances caused by the recession in the country.

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Posted by Michael Beam

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