According to some city analysts, UK small businesses are set to see a sharp rise in the availability of short and long term credit over the coming months.
The news follows last month’s creation of a business bank accounts taskforce, set-up to improve debt finance for UK SMEs and entrepreneurs. It is believed by some that the taskforce is the banking industry’s knee-jerk response to growing pressure from the government, who are still concerned about the state of the economy and how this is affecting smaller companies.
One of the taskforce’s more controversial ideas is the formation of a state-backed fund, held across a selection of the UK’s best business bank accounts. The proposal would require a considerable investment from the taxpayer, similar to that of the recent bank bailout package.
Key representatives from the taskforce, who include Lloyds TSB, RBS, HSBC and Barclays, are scheduled to discuss this idea with the Chancellor later this week. It remains to be seen however if Mr. Osborne or indeed the Treasury are receptive to idea of using further government reserves to finance the recovery in the private sector, particularly at a time when the public sector deficit remains dangerously large.