News

September 07, 2012

BCC makes the case for a British business bank

The British Chambers of Commerce (BCC) has set out the case for a state-backed business bank to support the needs of new and fast-growing businesses in a new report, The Case for a British Business Bank.

It highlights the fact that British high street banks have a sharply lower risk appetite today than they did in the past, leaving banks' loan books significantly smaller than they were.

"The case for a business bank grows clearer with each passing day," said John Longworth, director general of the BCC, writing in the Daily Telegraph. "Although many companies say their order books are full and they need financing in order to fulfil customers' requests, the overall stock of lending to small and medium-sized firms continues to shrink. Companies that are less than five years old, often at the point of a major growth spurt, are more likely to have loan applications declined. Independent inquiries show there is real 'discouraged demand' among businesses who are keen to expand, but too scared to even approach the bank for help."

The British Chambers of Commerce is calling on the coalition government to form a dedicated bank that will champion the interests of new, dynamic and fast-growing companies and create jobs, new technologies and wealth in the process.

"A British business bank would act as a first port of call for businesses seeking finance," said Longworth. "Working closely with high street banks, alternative lenders, sources of equity finance and others, it would ensure that most businesses actually get the working capital they need. It would only lend directly to young or high-growth companies unable to obtain finance through the commercial banking system."

Business banks work well in other countries, adds Longworth. "If a business bank is good enough for the USA, South Korea, and our neighbours in Germany, why not here in the UK? One can only surmise that a lack of will, rather than a lack of capability, is holding Britain back from creating a business bank of its own."