George Osborne has highlighted remarks by the chief executive of Lloyds TSB that the plan to recapitalise UK banks has failed to encourage banks to resume lending.
Eric Daniels, the head of Lloyds TSB, said in the Financial Times that recapitalisation “can cause wrong behaviours”, and stressed that banks could stop lending in order to free up the capital needed to repay the Government.
George, the Shadow Chancellor, said Mr. Daniels's comments showed the recapitalistaion package has failed to get credit moving again:
“Here is one of Britain’s most senior bankers saying, just as we have said, that the recapitalisation package may have rescued the banks, but it hasn’t rescued the economy.”
“Instead of Gordon Brown boasting about his plan abroad, he now needs to act at home to get credit flowing again to businesses, as we proposed.”