Prime Minister David Cameron has announced a new focus on small business lending instead of growing already-large investment banks. Mr. Cameron announced at the CBI conference that as major stakeholders in the Royal bank of Scotland and Lloyds Banking Group, the Coalition is in the position to ensure that lenders drive the recovery.
The Coalition wants to establish a “new economic dynamism” in the UK. Unfortunately, the focus on banks opened up a wider dispute that took attention away from the debate on growth. The “rough edges” in the relationship between businesses and politicians, as described by the Director General of the CBI, were showcased in this dispute.
Mr. Cameron announced that everything would be carefully analysed so as to determine how best to achieve growth. This includes bank lending, competition, international trade and innovation, among others. This “first ever infrastructure plan” should free up £200 billion of public and private investment in ports, construction, utilities and IT. The Prime Minister also promised a £60 million support fund for offshore wind-farm developments and £200 million for new high-tech research centres.
The dispute over the future of banks caused concern. Barclays President Bob Diamond warned that policies that taxed and restructured banks would “hamper” their ability to help economic recovery along. He was firm in saying that Barclays would “balance [its] responsibility to manage pay with the need to be commercial and competitive”.
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