Osborne to 'beef up' £80bn lending push: But Chancellor insists he's not in a panic about the economy

  • Banks will be offered even cheaper credit to lend more to small firms
  • Funding For Lending launched in August to raise flow of cheap loans
  • Lending to UK firms fell by £5bn in three months to end of February 

By Hugo Duncan and Tim Shipman

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Banks will be offered even cheaper credit to lend more to cash-strapped small firms today as fears persist that Britain is heading for a triple-dip recession.

George Osborne and the Bank of England will outline plans to beef up their £80billion Funding for Lending scheme after the Chancellor was forced to deny he was panicking over the economy.

The focus will be on increasing the flow of cheap loans to small and medium-sized enterprises starved of cash by British banks in the wake of the financial crisis.

Economic plans: George Osborne (pictured yesterday in Glasgow) and the Bank of England will outline plans to beef up their £80billion Funding for Lending scheme after the Chancellor was forced to deny he was panicking

Economic plans: George Osborne (pictured yesterday in Glasgow) and the Bank of England will outline plans to beef up their £80billion Funding for Lending scheme after the Chancellor was forced to deny he was panicking

Under the plans, banks who lend more to those struggling to get credit will be offered access to super-cheap Bank of England loans.

Funding For Lending was launched in August to increase the flow of cheap loans to households and businesses.

 

But latest figures show that lending to UK firms fell by £5billion in the three months to the end of February.

The scheme, which was due to expire next year, will now continue into 2015.

Official figures yesterday showed the Government borrowed £120.6billion in 2012-13, just £300million less than the previous year and far more than the £89billion initially planned.

Changes: Under the plans, banks who lend more to those struggling to get credit will be offered access to super-cheap Bank of England (pictured) loans

Changes: Under the plans, banks who lend more to those struggling to get credit will be offered access to super-cheap Bank of England (pictured) loans

The national debt jumped to nearly £1.2trillion at the end of March – or £47,500 per household, having doubled since early 2009.

'We expect the figures to show no growth at all. A triple-dip is a real possibility'

Rob Wood, Berenberg Bank

The economy shrank by 0.3 per cent in the final quarter of last year and another slump in the first three months of 2013 would plunge Britain into an unprecedented triple-dip recession.

‘We expect the figures to show no growth at all,’ said Rob Wood, chief UK economist at Berenberg Bank. ‘A triple-dip is a real possibility.’

Yesterday Mr Osborne admitted that the country faces ‘a slow and difficult recovery’. But asked if he was in a ‘panic’ over the state of the economy, he said: ‘No. The answer is no.’