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Government unveils details of new Business Bank

Business Secretary Vince Cable has outlined further details of the Government’s plans to introduce a new state bank in order to help small businesses to secure finance.

The new Business Bank will bring billions of pounds of aid together in a ‘one stop shop’, managing £2.9bn of existing Government debt and equity schemes, together with an additional £1bn for areas such as non-bank lending.

Announcing the details, Mr Cable said, ‘Inadequate access to finance for small and medium sized enterprises is one of the biggest risks to economic recovery. We need bold action to fix what has always been a weakness of the UK economy, and since the financial crisis, has become an urgent problem’.

The Confederation of British Industry (CBI) welcomed the announcement. CBI Chief Policy Director Katja Hall commented, ‘This should give confidence to businesses that there is now a long-term solution to plug the finance gap for patient capital in the UK’.

The British Chambers of Commerce (BCC) agreed that the timetable for implementation of the bank will boost the confidence of growing companies.

Dr Adam Marshall, BCC Director of Policy, said, ‘Now that a firm timetable for its delivery is in place, businesses will begin to feel that the promised business bank is starting to get momentum’.

However, Dr Marshall called on the bank to address the long-term structural gaps in the business finance market, by lending directly to growing companies that have previously failed to obtain growth capital, and by injecting more capital into the bank.