Osborne's £110bn injection to free up bank loans!

Lending spree

Key speech ... George Osborne

By TOM NEWTON DUNN, Political Editor, and STEVE HAWKES

Published: 15th June 2012

GEORGE Osborne last night fired a £110billion adrenaline shot into the heart of the British economy in a dramatic bid to fend off Eurozone disaster.

In an unprecedented move, the Chancellor teamed up with the Bank of England to release the jumbo sum to the banks.
High Street names must pass it on to desperate businesses and homebuyers, unblocking the nation’s dried up credit rivers.
It came as the Chancellor was accused of yet another U-turn — this time on his shake-up of banks. He promised to curb their risk-taking, but proposals have been watered down.
Last night, unveiling the bank loan plan in his annual Mansion House speech, Mr Osborne declared: “We are not powerless in the face of the Eurozone debt storm. Together we can deploy new firepower to defend our economy from the crisis.
“The Government — with the help of the Bank of England — will not stand on the sidelines and do nothing as the storm gathers.”
Officials have been secretly working on the blueprint for weeks. They have dubbed it “maxing out Plan A”.
It means the Bank of England will buy bad loans off banks, who will then be expected to lend out the money they get for them.
The bad loans will include tens of thousands of ordinary people’s mortgages.
The move has been made possible thanks to the UK’s “hard won” credibility on the international markets because of the Government’s tough deficit reduction plan, Mr Osborne also said.

'We can get through this' ... Sir Mervyn King

The cash injection is the most ambitious in a series of initiatives unveiled by Mr Osborne to find growth.
They include £325billion of quantitative easing — effectively printing money.
Other measures, including this scheme, have cost £130billion. So far it has failed to stop Britain sinking back into recession.
Business chiefs have savaged Mr Osborne for not come up with a big enough plan.
With potentially disastrous Greek elections just two days off, the Chancellor warned dithering Eurozone leaders it was “make up your mind time” over Athens staying in the single currency.
Bank of England boss Sir Mervyn King said: “In the United Kingdom, we can and will get through this.”
But Labour said the move was an admission the Government’s growth pushes have failed. Shadow Chancellor Ed Balls said: “Without urgent action now Britain will pay a very heavy long-term price.”