The independent Office for Budget Responsibility anticipated growth for our economy this year to be 0.9% and for next year, just 0.7%.
George Osborne also announced a £40bn National Loan Guarantee Scheme. This aims to support lending to businesses in the private sector. It also aims to put £5 billion in capital projects.
Osborne said that this loan guarantee scheme would mean that more smaller and medium sized businesses would be able to get the business finance they need to expand and succeed as a flourishing business.
This is because the scheme would allow banks to lend to companies that have a turnover of less than £50 million and with interest rates at 1% lower than current levels.
CBI Director General, John Cridland said,
“The Autumn Statement works with the realities of today and provides an imaginative framework for UK businesses as it strives to secure growth and jobs. This is “Plan A plus” in all but name.The downgraded forecasts and outlook were no surprise, but the eurozone crisis is still hanging over us. The Government’s dogged commitment to budget deficit reduction remains the only way to maintain the UK’s triple A credit rating and low interest rates on international money markets. We particularly welcome the new emphasis on capital spending, and the measures to leverage private sector investment on infrastructure for roads and energy. Equally important for jobs and growth is the recognition that the UK’s energy-intensive users need help as a result of the unilateral increases in manufacturing energy costs from the carbon floor price and electricity market reform.”
This National Loan Guarantee scheme is seen as a way to sage guard future bank lending to both small and medium sized businesses. This acts as a practical way to ensure that businesses still get the business finance they need despite banks finding it tough.
However, many are still skeptical that banks will still approve few business finance applications, or at least the minimum expected of them. Alternative methods of lending are being sought by small businesses in order to ensure survival in this tough climate.
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