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Bosses tell MP of bank lending fears
A FORMER economist at the Bank of England visited Worcester to talk to the city’s business leaders about surviving the harsh economic climate.
Rachel Reeves, who is now an MP and shadow chief secretary to the treasury, went to see members of the Hereford and Worcester Chamber of Commerce.
During the meeting, over breakfast, she heard how low bank lending was making life tough for private firms.
She told your Worcester News she went away concerned about the “lack of demand” in the economy.
“Because we’re back in recession consumer confidence is low, and that is creating a lack of demand in the economy,” she said. “But the second point made to me was how locally, not enough bank managers are being empowered to make decisions over lending money and that is causing an issue.
“More than ever, businesses with sound plans in place need access to finance. During my meeting I saw many firms with strong reputations and track records who are not getting money.
“We’ve gone from feast to famine and that’s an area which the Government could look at. When this happens smaller firms don’t really stand a chance.”
She said a major problem was because many banks were trying to rebuild their balance sheets and have become wary of taking risks.
“There’s many reasons for it, one of the main ones is the fact that when you’re trying to rebuild a balance sheet they do become averse to risk,” she said.
“But it’s a vicious circle. I’d much rather see them look to lend more, rather than pay out bonuses.”
She also said one of her main aims was to show business leaders how much the Labour Party was trying to change while in opposition.
“People had felt we’d lost touch with them, and that we weren’t on the side of businesses, and that’s what we need to change.” During her stop in the Faithful City she also went on a tour of the factory floor at Worcester Bosch before heading to Stoke-on-Trent.