The jury is still out, although it seems clear that the current Chancellor appears to favour the former.
As I type this, a survey from the
(IoD) has just been released,
which is critical of the Chancellor’s ‘belt tightening’ policies. Sadly, the IoD members conclude that the
country will still be in recession at the end of 2012. Institute of Directors
Whether that will be the case remains to be seen but as the Labour PM, James Callaghan, admitted in 1976, additional spending only worked by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment. At the moment both of those factors are just about under control and no one wants them rise.
Much of the capital injected into the banking system through quantitative easing has ended up there – with the banks…which has increased their capital base significantly.
In spite of claims that lending has increased, small businesses are still not getting the funding they require. A recent Bibby Financial Services survey suggested that less than one in ten small businesses succeeded in gaining finance from their Bank. Could it be that banks are not lending because they have hidden liabilities?
Posted on behalf of Advisor Angus.