Government Launching Bank to Fund Small and Medium-sized Businesses
Business Secretary Vince Cable announced plans for a government-funded bank. It is intended to provide finance to British businesses that had previously found capital hard to come by.
The announcement comes as a response to a report by Tim Breedon’s taskforce on non-bank finance. The report worked on the assumption that the economy will recover in the coming years.
As the economy grows over the next 5 years the taskforce believes that there will be a disparity between small businesses’ demand for finance and banks’ ability to deal with it.
The report estimates that constraints placed on banks following the 2008 banking crisis will lead to a shortfall of between £84 billion and £191 billion in finance available to business.
Hoping to counteract this shortfall, the government is establishing a bank to provide British businesses with access to £10 billion worth of funding. Cable said the bank will respond to a need within British industry for a business bank with a clean balance sheet.
The bank will form a key part of a wider ‘industry strategy’ announced by the Business Secretary earlier this month. The strategy is set to include £165 million of funding to develop the skills required by businesses.
The strategy also includes making £180 million available to encourage the ‘commercialisation of research’. It is hoped that this will reduce the time it takes for academic research to bear fruit in the form of commercial products.