Credit famine suffocating economic recovery

2.09.00pm GMT Wed 11th Nov 2009

Commenting on the Bank of England's inflation report in which Governor Mervyn King said the UK economy had 'only just started' along the road to recovery, Liberal Democrat Shadow Chancellor, Vince Cable said:

"It's very clear from this gloomy analysis that the heart attack suffered by the British economy has had profound long-term effects.

"There can be no question of a return to business as usual.

"Those in the City who are getting excited about temporary improvements in the stock market, housing market and bank profits should realise that we need deep and major changes in order to rebalance the British economy in a fundamental way.

"This means not just a clear plan for working down the structural deficit but a commitment to rebuilding British infrastructure, making the economy less dependant on the banking system and breaking up the big banks so that they are not putting the economy at risk in the future.

"What is very striking is the Governor's reference to a continued famine of credit to good British companies.

"Since the taxpayer has rescued the banks, they cannot be allowed to continue suffocating British industry and business generally. The Government must be much more proactive in ensuring that the banks, particularly the nationalised and semi-nationalised banks, lend to corporate customers."