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Cable: Lack of business lending is throttling growth

Date Added: 10/07/2012  

Business minister Vince Cable has criticised the UK's major banks for not lending enough money to the country's small businesses.

In an interview with BBC News, the Liberal Democrat MP stated the recovery is being "throttled" by a lack of available business lending.

He said small-scale companies in particular are among those unable to secure the loans they need to grow as organisations and boost the economy of the UK as a result.

Earlier in the year, it was revealed by the Office for National Statistics that the UK has experienced successive periods of negative growth, which means it is back in recession.

Mr Cable described business lending as "the real problem", adding he has visited some firms that have secured large orders but are not able to secure the loans to ensure they can meet the production targets. He noted: "We now have to focus single-mindedly on that task, how to make sure that the additional money gets into British business."

The business minister suggested there has been a breakdown in the system that means the cash no longer filters through the banks to the country's small companies.

Mr Cable has been calling for the UK's banks to be reformed since the coalition government came to power two years ago, but has been met with lots of opposition to his plans.

In the wake of the Libor scandal - which saw banks rigging the interest rates they lend to each other at - the minister stressed the need for the current system to be overhauled.

The Liberal Democrat MP recently announced reform of competition landscape, which he said is essential in order to make business fairer, explaining red tape needs to be cut to remove the barriers to the growth of small firms in the UK.

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Posted by Miles Pritchard

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