Chancellor George Osborne and Governor of the Bank of England Sir Mervyn King have unveiled new plans that the Chancellor says will “defend our economy from the crisis on the doorstep” – referring to the growing Eurozone crisis. The government will make more than £100bn available for the plan which is being dubbed as a “funding for lending” scheme. Banks will need to provide collateral in the shape of mortgage agreements and loan agreements and, by doing so, will receive the equivalent back in cash.
The scheme isn’t aimed solely at families looking to invest in their own properties either. The Chancellor has said that banks will be encouraged to lend money to businesses that are looking to expand operations or increase their size. Small businesses could prove to be real winners in the plan. Insiders say that there is actually no upper limit to the lending so the figure could rise higher than the mooted £140bn.
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