By Marcus Leach

The Bank of England announced on Thursday that there will be two new stimulus packages aimed at improving what has been, in recent weeks, a worsening economic outlook in the UK.

Sir Mervyn King, governor of the Bank of England, has said they will, along with the government, provide billions of pounds of cheap credit to banks to lend to companies.

In response to the Chancellor’s announcement last night the Forum of Private Business's Chief Executive Phil Orford said that on the face of it the news is good.

“Borrowing costs have been rising while lending has continued to fall, so on the face of it this should be good news for those small businesses struggling to make ends meet," he said.

“We can only hope that the banks now embrace it as an enabler to boost lending, which in turn will help recharge the UK economy and get it growing out of recession.

“The fact is though that the banks have consistently failed to lend fairly since the crisis began, despite a number of state initiatives — the Griggs’ report has only recently highlighted this. Here we have another credit easing scheme, albeit on a much grander scale, to get the banks splashing the cash.

“You could argue maybe the Chancellor and the BoE hitting the ‘Plan B’ panic button should have come much sooner.

“But no matter what lending schemes are put in place, nothing will imbue confidence here more than the eurozone sorting itself out. That remains the chief issue facing the UK economy at the minute, and no number of lending initiatives here can solve that.”

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