Recovery could be ‘choked off’ without cash, says CBI
CBI director-general John Cridland has warned the UK’s recovery will be “choked off” unless efforts are stepped up to give business access to finance.
Setting out a menu of ideas last night, he argued good ideas from the Government had so far been “lost to poor implementation”.
His plan includes giving corporates an incentive to invest in supply chains rather than hoarding cash, improving Government trade finance measures, and making the “NewBuy” scheme more appealing to first time buyers.
He said: “The fact is we need to raise levels of finance in the economy to support our growth aspirations. The announcements by the Chancellor and Bank of England Governor at the Mansion House signalled fresh action to strengthen our defences against shockwaves from the Eurozone and get more money flowing into the economy.
“We need an action-this-day approach, and the lesson so far is that we must not allow good intentions to be lost to poor implementation. I want to see urgency to stop the recovery being choked off by a lack of finance.”
Mr Cridland criticised the Government for “gold-plating” new international reforms of the banking system and called for an easing of liquidity requirements.
He also suggested the Bank of England could embark on further quantitative easing but invest directly in bank bonds and corporate paper.
Mr Cridland added: “We need to refresh our approach to financing so it’s squarely behind our long-term vision for a rebalanced economy. We have to focus our financial firepower on high-growth firms, global exporters and the UK’s dynamic larger companies.
“Measures to support high-growth, medium-sized businesses must be at the forefront. They need more than pure bank finance, and to make more use of equity to fund expansion. None of this is new – but the time for action is now.”
