Consumers are spending money. Unemployment is down. The recovery in the economy witnessed since early 2013 is embedded. This is the time when businesses are thinking about expansion, weighing up the costs and benefits of buying some new kit. It should be a moment in the sun for Funding for Lending (FLS), the government's scheme that provides banks with incentives to provide credit for investment projects.
But it isn't happening. The Bank of
While it can be argued that borrowing would be even tougher had it not been for the FLS, the numbers tell their own story. The scheme is not delivering. The small but potentially rapidly growing companies are not getting help from the banks, despite the incentives provided by the government and the changes to focus the scheme purely on business lending.
Don't blame the Bank of
Instead, the real problem is that the traditional high street banks find it safer and more profitable to lend against bricks and mortar than they do to lend to a company that might go bust in the next couple of years. The fact that the government is using its new
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