Why is there so little talk about the recent £100bn UK stimulus package?

ShaneSwift
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Lieben Der Kuche Ltd
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It has been just over a week since the announcement of the UK governments proposal to inject £100bn in stimulus into the UK banking system with £80bn of that directly earmarked for reduced cost borrowing via a “funding for lending” scheme – enabling banks to offer cheaper loans to businesses and households over several years.

Whilst the reception from the economists has been muted, one cannot help but wonder if in their assessment they are focusing too much on the stimulus being overshadowed by the ever looming Eurozone debt crisis and not looking the micro-economic effect that will make a real difference to many UK small businesses and home owners?

For the last 4 years we have heard everyone from the now pretty much defunct Business Link, the Federation of Small Businesses, and UK small business owners and home owners themselves all direct fierce criticism at the UK banking sector for not passing on the liquidity to their customers. Not passing on cheaper rates of borrowing. Not sanctioning borrowing in the first place and not listening to the needs of their customers, who in many cases (inbeing taxpayers) indirectly own the very banks that wont lend them any money.

So now that the government is finally doing something about it, the media attention seems to be more focused on the doom and gloom of Spanish bailouts and not the UK stimulus?

Simon Ward, chief economist at Henderson Global Investors by-passed the intended benefit of the stimulus altogether and instead focused on the fact the cheaper borrowing now wont do anything for those already in lending agreements? Well no it wont but the key thing here is that there is an overall net benefit to the economy and businesses and home owners alike.  

His argument is like saying that the recent announcement that Costa coffee creating 3500 UK jobs wont be of benefit to those who already have jobs?

Rather than just hand the money over to the banks to sure up their own balance sheets the condition that 80% must go to UK homeowners and businesses is in my view a good thing and whilst I don’t like many of the current governments policies, I think that whilst we criticise the bad policies and in some cases have effected a U-turn, we should also give credit where it is due. It would be nice to see some tax breaks, VAT reductions on UK goods and services but I will accept the stimulus in good faith and hope that we may get more of the same.

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