Chancellor George Osborne has said the launch of an £80bn emergency scheme to kick-start bank lending showed that Britain was “not powerless to act” in the face of the eurozone crisis.
The Bank of England and the Treasury unveiled their ‘funding for lending’ programme in an attempt to ward off a tightening credit squeeze and help drag Britain out of its recession.
The bank painted a grim picture for households and businesses yesterday as it warned that credit availability was falling and borrowing costs rising as the eurozone woes take their toll on the banking sector.
But the new scheme aims to free up the log jam in credit hitting the economy by offering banks cheap finance on the condition that they pass it on to borrowers.
Mr Osborne said the initiative would “inject new confidence into our financial system ... showing we are not powerless to act in the face of the eurozone debt storm”.