At the beginning of this month; the Bank of England introduced its ‘Funding for Lending’ scheme; designed to boost lending to the real economy. By injecting an estimated £80billion, the UK government aims to encourage bank and building society lending of home and commercial mortgages, loans, bridging finance and buy to let mortgages with the assistance of a financial incentive. Despite the economic crises; the Bank of England intends to encourage further lending by reducing borrowing costs to banks and building societies across the country; a move welcomed with open arms.
In a public announcement; the Treasury announced that eligible financial firms will be able to borrow up to 5% of their stock of existing lending to the economy; to put it simple, banks would now be allowed to borrow at a low cost on the condition that they improve their offerings. With the scheme designed to improve commercial mortgage and loan lending it would only be right to assume the British economy and with it, the pound; would be set to see a long awaited improvement however today’s reports suggest otherwise.
Today, the Bank of England officially cut its growth forecast for 2012 to zero; despite speculation that interest rates would be further slashed. Boss, Sir Mervyn King squashed all rumours of a further reduction to the already astoundingly low interest rates stating that it could cause shockwaves of damage to the UK economy however; finance experts have argued that the damage may have already been caused as a result of the miserably low forecast.
The forecast for the remaining British financial year is fear-provoking which is why experts will now increasingly advise those seeking any form of financial assistance to seek the support and advice of experienced brokers. Now is a crucial time for personal and business assets but despite the governments continuing efforts to rehabilitate the UK finance sector; for the foreseeable future, businesses and home owners will see struggle ahead.