Andrew Bailey: Banks should ‘put their back into’ coronavirus lending
Bank of England governor Andrew Bailey has sternly told banks to “put their back into” lending to struggling firms during the coronavirus outbreak.
Lenders have come in for criticism that they are being too slow at handing out money through government-backed support schemes designed to stave off business collapses.
Last week, Morning Wire revealed that only 2,022 small and medium-sized firms had accessed loans worth £292m through the government’s main scheme. This had increased to £1.1bn this week.
But Bailey told banks they needed to move more quickly. “Notwithstanding the stress that we’re all operating under in terms of the current working environment, they have got to put their backs into it and get on with it, frankly,” he said in a virtual press conference.
“It does have to be tackled because otherwise we are going to destroy people’s livelihoods or get scarring of the economy,” he said.
The governor said that the UK budget watchdog’s scenario of a 35 per cent drop in GDP in the second quarter was “not implausible”.
Yet he would not say whether the UK economy will bounce back strongly, as the Office for Budget Responsibility said it thought it would.
He said the Bank’s monetary policy committee (MPC) would be looking into this and would lay out its view in forthcoming forecasts.
Bailey reiterated that the Bank stands ready to support the economy during the coronavirus crisis. He said “there is an awful lot of commitment” from policymakers around the world to doing “what needs to be done”.
The Bank has slashed interest rates to record lows and ramped up its bond-buying programme to ease the pain in the financial markets. It has also started buying up firms’ short-term debt.
The BoE is due to make another monetary policy decision on 7 May, when it will also produce a keenly awaited report into the economy.