The chancellor Alistair Darling is meeting with the heads of
major banks to put pressure on them to reduce the costs of lending
to SMEs.
The chancellor is likely to argue that with the Bank of England
base rate at the lowest it has been in living memory it is
unacceptable for the banks to be charging business customers so
much for loans.
The banking leaders who will meet Darling this afternoon are
likely to counter his argument pointing out that although the base
rate is 0.5% they have to pay much more for funds and those costs
have to be passed onto customers.
According to numbers from the British Banking Association
released this morning, lending to small companies increased from
£133m in May to £366m last month, and 50,000 new accounts were
opened.
"These figures provide more evidence of the high street banks'
support for small businesses. Structured term lending rose by £366m
in June, while deposits and numbers of new business relationships
continued to hold up, perhaps reflecting improved business
confidence in trading conditions," said David Dooks, statistics
director at the British Banking Association.
Since the credit crunch started to bite last year the government
has tried, with varying degrees of success, to get the banks to
return to the lending conditions of 2007.
This story originally appeared onMicroScope.co.uk