Two lending schemes announced to help UK businesses

The coordinated action by the Bank of England and Treasury will see an estimated £80 billion offered to banks on condition they pass it on to businesses and households in the form of cheaper loans and mortgages.

The Chancellor George Osborne has said whilst the UK has some way to go before it is out of recession, the measures he announced this week will have a direct impact on households and businesses.

Governor Sir Mervyn King said that the UK’s economic performance had been condemned by events in the euro area, "where the crisis has grown to cast a long shadow over our own recovery, holding back both exports and investment".

According to Mervyn King, the "exceptional circumstances" of the crisis have created the need for the Bank of England to generate funding schemes that would "bridge to calmer times". The new schemes are designed to prevent banks from desperately hoarding in anticipation of impending disaster.

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