Think-tank makes recommendations for Cable's "business bank"
A leading think-tank has argued that Vince Cable’s “business bank” will need a £40bn investment before it gets off the ground.
According to think-tank IPPR, the government should spread this investment over 4 years. At the same time, the bank should be allowed to raise up to £100bn of its own funds on capital markets.
The report argues that the bank “should focus on two areas where the UK has longstanding problems: finance for infrastructure projects and lending to small and medium-sized businesses.”
IPPR urges the government to allow the bank to invest in infrastructure projects, such as road and rail projects, in order to encourage private sector investment.
The think-tank also recommends that the bank be able to support small and medium sized businesses in an effort to sustain local economic growth.
Tony Dolphin, chief economist at IPPR, said, “What we need in the UK is a fully-fledged British investment bank designed to suit the particular circumstances of our economy.”
Business Secretary and leading Lib Dem party member Vince Cable announced the plans for the “business bank” earlier this month. Details on the bank’s structure and remit were not revealed however, leading to much speculation from stakeholders.
Cable is thought to be behind the idea of using state lending to kick-start the economy, however he is fiercely opposed by chancellor George Osborn.
Dolphin said, “Because the chancellor will not spend more government money boosting aggregate demand in the economy, he has been reduced to indirect schemes like funding for lending to support growth.”