Commenting on the Chancellor of the Exchequer's announcement of new 'credit easing' measures to help small- and medium-sized businesses access finance, John Longworth, Director General of the British Chambers of Commerce (BCC), said:
"The £20bn credit easing package announced by the Chancellor is a big shot in the arm for Britain's real economy. As the BCC's latest economic forecast* shows, the UK’s prospects for growth remain shaky, and measures of this size and scale are urgently needed to sustain a credible recovery. Credit easing measures must be implemented quickly in order to boost business confidence and increase the flow of finance to viable and growing companies.
"As the key link between the scheme and local businesses, the banks must swiftly regain the confidence of smaller firms by ensuring that viable companies are encouraged to take up the new source of credit on offer. As well as encouraging more suppliers to the business market, particularly at a regional level, the new credit easing scheme is only a first step to ensure consistent access to finance, on realistic terms, for growing businesses. In the coming months, the Treasury must act forcefully to create a framework that allows business loans to be packaged up as tradeable securities. This bold move would transform the business finance environment in the UK, and give more small- and mid-sized companies the chance to secure the financing they need to grow.
"It is also crucial for the Monetary Policy Committee to play a constructive role in supporting the new credit scheme, by reassessing its current reluctance to purchase private sector assets as part of the QE programme. Our new forecast makes it clear that the MPC's commitment to QE cannot achieve its full potential without further measures to improve to the flow of credit to businesses."