'Give firms loans' to cut job losses, group says

17/08/2009

A business group has called on the government to give extra help to the UK's small firms in order to stave off job losses.

Figures put together by the Federation of Small Businesses (FSB) and reported in the News of the World suggest that firms will cut 340,000 jobs in the UK this year due to problems in securing and paying back credit from banks.

The group also revealed that around 100 firms were entering administration each day for the same reasons.

Liberal Democrat shadow chancellor Vince Cable was quoted by the newspaper as saying: "It is a scandal for [banks] to send good businesses to the wall by withdrawing credit."

John Wright, FSB chairman, added that businesses "are still being crippled by banks charging over the odds for loans" - and pointed out that many of these lenders had been bailed out by the government due to the global financial crisis.

Late last year, ministers put together a £37 billion rescue package that has left the government with partial ownership of RBS and the Lloyds Banking Group, incorporating HBOS and Lloyds TSB.

Borrowing pressures for commercial banks have also been eased by the Bank of England slashing its own lending rate to an all-time low of 0.5 per cent.

"With several banks owing their very survival to taxpayer money, they must set a lending policy in line with the public interest," Mr Wright said.

Tags; Job loss, Credit Card Lifestyle, Recent Graduate Debt,

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