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Friday, 3 April

Banks Cut Interest And Increase Lending To SMEs To Combat Effects Of Coronavirus 

Banks Cut Interest And Increase Lending To SMEs To Combat Effects Of Coronavirus 

The Bank of England has this morning announced an emergency cut in interest rates, to protect the British economy from the impact of Coronavirus.

The rate has been cut from  0.75% to 0.25%.

Help to support business and consumer confidence

 

In the official statement from the Bank of England, it was confirmed that it would help free up extra money “in excess of £100 billion” to help banks support firms:

“The reduction in Bank Rate will help to support business and consumer confidence at a difficult time, to bolster the cash flows of businesses and households, and to reduce the cost, and to improve the availability, of finance.  

“When interest rates are low, it is likely to be difficult for some banks and building societies to reduce deposit rates much further, which in turn could limit their ability to cut their lending rates.

“In order to mitigate these pressures and maximise the effectiveness of monetary policy, the TFSME will, over the next 12 months, offer four-year funding of at least 5% of participants’ stock of real economy lending at interest rates at, or very close to, Bank Rate.

“Additional funding will be available for banks that increase lending, especially to small and medium-sized enterprises (SMEs). Experience from the Term Funding Scheme launched in 2016 suggests that the TFSME could provide in excess of £100 billion in term funding.”

Additional measures are expected to be revealed in Rishi Sunak’s first Budget later today

Picture: The Bank of England has this morning announced an emergency cut in interest rates, to protect the British economy from the impact of Coronavirus.

Article written by Ella Tansley

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