Bank Rescue Plan to include SMEs
This morning’s government announcement of the rescue package for the UK banking system did include mention of the UK’s small business.
PM Gordon Brown and Chancellor Alistair Darling announced details of a £50 billion rescue package for the country’s banking system. Initially the capital will be made available to the UK’s largest banks in return for shares in them.
The PM stressed that negotiations will be taking place in order to ensure that credit is still available to small firms. UK SMEs make up over 90% of business in the country so they play a massive part in the economy; a failure to address their circumstances would have wide-reaching implications on the economy, so for the government to specifically address extending a lifeline to small firms is vitally important.
The CBI welcomed the move, with their Deputy Director-General, John Cridland, saying:
â??We welcome today’s essential measures which strengthen the British banking system, and will help provide financial stability for the country.”
â??British business is facing a freezing of bank finance. Many companies need this action to keep investment and working capital flowing.”
â??This step to build confidence in the City needs to be followed tomorrow by a half-point cut in interest rates to boost consumer confidence.â?
He also called for the Bank of England’s Monetary Policy Committee to cut interest rates by half a percentage point when they meet tomorrow.
UPDATE: The Bank of England has just made a surprise cut in the interest rate, a day earlier than expected.