George Osborne will provide a much needed boost for UK Small and Medium Enterprise when he delivers the Autumn Statement on Tuesday 29th November. He is due to reveal details of a credit easing scheme worth £20 billion.
During an interview with the BBC on Sunday morning, the Chancellor spoke of the introduction of a National Loan Guarantee Scheme, part of a package of measures worth around £40 billion. The scheme would involve borrowing from banks being underwritten by the government to provide credit at a lower cost. The banks will pass on the savings to businesses with less than £50 million turnover. Speaking to Andrew Marr, the Chancellor said that the scheme would involve very little risk to the government, with the banks carrying any risk of lending to businesses. The Chancellor said:
“If you’re a business borrowing money at 5pc we might be able to cut the interest to 4pc. The economic situation facing many countries at the moment is very, very difficult, and that’s clearly had an impact on the UK.”
The scheme aims to reduce the cost of borrowing for SMEs, stimulating private sector businesses. Ultimately, it is hoped that the process will create jobs, boost economic growth and avoid falling back into recession. Among other plans to be outlined in the Autumn Statement are details of an investment fund in the private sector, which will provide loans to medium sized businesses. The government will have some involvement in the fund, and it hopes to encourage an alternative source of lending for businesses.
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