Abacus Daily Debt News

Businesses ‘could be suffering from bank hoarding’

Companies throughout the UK are continuing to falter because of poor lending on the part of banks, one politician has suggested.

Liberal democrat shadow chancellor Vince Cable said the Bank of England’s decision to increase quantitative easing "is the right way to go", but argued that it may not filter through because of creditor behaviour.

He remarked: "As financial institutions continue to hoard money, quantitative easing has not yet fed through to the rest of the economy. It’s vital that it does."

It is important that the additional money is supported by government policy to aid organisations in accessing finances to help them through the recession, Mr Cable added.

By pushing ahead with more quantitative easing, he stated, the Bank of England has made it clear that the UK economy has not fully recovered yet.

The Bank of England Monetary Policy Committee decided to increase its programme of asset purchases yesterday (August 6th) from £50 billion to £175 billion.

By Francis Finch