Cable warns on business lending

Date: 2nd September 2009

New Bank of England figures highlight the fact that some small businesses are finding it difficult to get credit, Vince Cable has said.

The Liberal Democrat shadow chancellor issued the warning following the release of the data yesterday.

According to the Bank, overall business lending dropped by £8.4 billion in July, a 1.7 per cent fall on the previous month.

This is the sharpest contraction in credit since records began 13 years ago - and reflects the wider financial concerns currently faced by banks.

Mr Cable said: "If firms are unable to access credit it is likely we will see even more companies going under, deepening the recession and driving up unemployment.

"It is critical that viable businesses get the credit they need if we are to see a good recovery for the UK economy."

The Bank of England has implemented radical monetary policy moves over recent months as it aims to increase the money supply to banks.

Interest rates have been cut to 0.5 per cent, while the institution has also committed itself to a £175 billion policy of quantitative easing.