Forcing banks to lend will be a huge error

IEA responds to plans laid out by the Business Secretary

Responding to the plans announced today by Vince Cable, Professor Philip Booth, Editorial and Programme Director at the Institute of Economic Affairs, said:

Forcing banks to lend will be a huge error

“Unsurprisingly banks are being cautious about lending after the recession as they need to rebuild their balance sheets."

“If we want to see increased availability of capital for small businesses the best thing the government could do is to tell the FSA to stop binding banks up with more regulation and increased capital requirements."

"Should the banks be cajoled into lending by the government and then those loans “go bad” the government will have no option but to bail them out again. This would be a catastrophe.”

Cable right to make cutting red tape a priority

“Vince Cable is right to make cutting red tape a priority early on. Allowing business to thrive and restoring Britain’s economic growth requires