Osborne calls on Government to underwrite business loans

George Osborne has unveiled plans to free up the credit market by creating a new state institution that underwrites lending from the banks to British businesses.

The Shadow Chancellor stressed that Labour’s bank recapitalisation scheme may have rescued the banks and the bankers, but it has not rescued the economy.

“The Chancellor told us that the purpose of the bank recapitalisation was to restart lending to the real economy. On that test, even he must agree that the bank recapitalisation has failed.”

George said “radical policy action” was essential to help businesses get the credit they need – and he called for a new institution that will guarantee lending from banks to businesses.

“(This) would really help get the British economy back on track and stop the terrible rise in unemployment now taking place again under a Labour government.”

George stressed that this scheme would not increase government borrowing - instead it would be like the secured guarantees for a fee that the Bank of England has already put in place for inter-bank lending.