The Government and the Bank of England must act fast to get more credit flowing to businesses in an effort to rescue the economy, according to the director general of the CBI.
John Cridland is pressing a fresh round of quantitative easing (QE), potentially going beyond conventional government assets, as part of an eight point plan.
Last week, chancellor George Osborne and bank governor Sir Mervyn King outlined plans to boost bank funding on condition the lending was passed on to consumers and small businesses.
But in a speech to business leaders in London last night, Mr Cridland stressed the need to move swiftly.
“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.
“I want to see urgency to stop the recovery being choked off by a lack of finance.”
Mr Cridland’s eight point plan also includes easing gold-plated liquidity rules to help banks lend more, changing new solvency rules to enable insurance companies to invest and making the NewBuy scheme more appealing to first time buyers.
He is also calling for an urgent boost of non-bank finance to mid-sized businesses, a ‘one-stop shop’ for SME lending schemes, using government-backed trade finance to boost exports and starting corporate venturing incentives for large firms to provide financial support for supply chains.
Mr Cridland added: “Measures to support high-growth, medium sized businesses must be at the forefront. They need more than pure bank finance, and to make more use of equity to fund expansion. None of this is new – but the time for action is now.”
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