UK business lobby urges more steps to ease credit
LONDON (Reuters) - The government and the Bank of England must take further action to ease credit costs for businesses in order to get the economy back on track for growth, the country's CBI business lobby urged on Thursday.
Only one week after chancellor George Osborne and central bank governor Mervyn King announced plans to make cheaper funding available to banks against pledges to keep lending up, CBI Director-General John Cridland warned against the dangers of slow implementation.
"We need an action-this-day approach, and the lesson so far is that we must not allow good intentions to be lost to poor implementation," he said in a speech to business leaders, according to excerpts made available in advance by the CBI.
"I want to see urgency to stop the recovery being choked off by a lack of finance."
The CBI's call adds to the pressure on government and central bank to get the economy growing again.
Britain has fallen into its second recession in four years, and is in danger of a longer slump as the crisis in the euro zone - its largest trading partner - is hurting exports and business confidence.
Cridland proposed an eight-point plan to get more credit flowing to businesses.
Britain should immediately ease the liquidity requirements for banks, something governor King hinted at in his Mansion House speech last week. In addition, European regulators should ease rules for infrastructure investments by insurers.
"There are no silver bullets, but the Bank should push the button on a further round of quantitative easing, and it should seriously consider investing directly in non-government assets, like bank bonds and high-grade corporate paper," Cridland said.
The government should help potential house buyers with mortgage indemnity guarantees to support real estate and construction industries. Using government-backed trade finance could give exports an important boost, Cridland said.
In addition, the government should do more to help businesses access finance from sources other than banks, such as bond market or equity finance.
(Reporting by Sven Egenter; editing by Ron Askew)
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