A billion pounds are to be spent on a new state-backed bank, intended to boost lending to smaller businesses in an attempt to revitalise the UK economy.

This is according to a promise from business secretary Vince cable, although funding details for the venture are still vague:  where the government will find the money won’t be made public until the autumn statement. The government are hoping that private sector investment will match this sum, although at present no private money has been pledged.

The institute would operate through the wholesale market and support the supply of loans through existing banks and other financial providers. According to the BBC’s business editor Robert Peston, this is ‘an attempt at serious structural financial reform to provide longer term, stable loans to smaller businesses, not a quick fix’.

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