Britain extends credit-easing scheme to big firms

Tue Jun 26, 2012 11:11am EDT
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By Fiona Shaikh

LONDON (Reuters) - Britain is to expand its credit-easing scheme for small businesses to include larger firms and will also give banks more options to access state-guaranteed funds to boost take-up, finance minister George Osborne said on Tuesday.

The move comes as the government faces growing calls to stimulate Britain's flagging economy, which is suffering its second recession in four years.

Policymakers have highlighted a lack of credit as a major obstacle to Britain's recovery.

Osborne's comments on Tuesday related to the National Loan Guarantee Scheme (NLGS), launched in March, aimed at lowering the cost of borrowing for small businesses by giving banks a state guarantee to issue debt.

Giving his first assessment of the scheme in parliament, he said so far banks had offered 10,000 loans worth 1.682 billion pounds to businesses with a turnover of up to 50 million pounds.

He said the EU had granted approval for the scheme to be extended to include firms with an annual turnover of up to 250 million pounds - 99.9 percent of British businesses.

The finance minister, or Chancellor of the Exchequer, said banks had issued 2.9 billion pounds ($4.5 billion) of state-guaranteed debt since its launch, slightly more than the 2.5 billion pounds envisaged for this stage of the program.

The scheme is designed to guarantee up to 20 billion pounds of debt over two years.   Continued...

A man walks through the financial district in the City of London June 22, 2012. REUTERS/Neil Hall