Darling promises bank funding is "under review"

by Catherine Woods - Tuesday, 3rd June 2008 -

Alistair Darling maintains the government is keeping a close eye on the availability of funding for smaller businesses as the credit crunch approaches its second year.

The Chancellor says while most smaller firms are still able to raise funds, the government continues to take action to ensure money remains accessible to companies that need it.

Repeating earlier statements about the expansion of the Small Firms Loan Guarantee Scheme (as announced in the Budget) and a plea to the European Investment Bank to invest more in British business, Darling adds: “We want to ensure small businesses do have and can get access to adequate and affordable levels of funding so it’s something we keep very closely under review.

"In relation to the Small Firms Loan Guarantee Scheme and the EIB, these are two things that will help.”

The credit crisis began to really bite in July/August 2007. The Northern Rock saga followed and the banks stopped lending to each other, making funding for businesses arguably more expensive and difficult to obtain.

At the recent Global Financial Services Conference in Edinburgh, HBOS chief executive Andy Hornby praised the government’s efforts to increase liquidity in the market.

However, he said “a sense of normality” with regards the wholesale money markets is unlikely to return until well into 2009.

Picture source

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