Britain's business minister has lambasted the Bank of England for 'imposing restrictions' that inhibit recovery…
Liberal Democrat politician Vince Cable, the Secretary of State for Business, Innovation and Skills, has criticised the Bank of England for what he regards to be excessive restrictions placed on banks which, in turn, hold back economic growth.
'One of the anxieties in the business community is that the so called ‘capital Taliban’ in the Bank of England are imposing restrictions which at this delicate stage of recovery actually make it more difficult for companies to operate and expand,' said Cable to the Financial Times. 'It is clear that the main banks are failing to support good British companies in key areas like exporting and innovation.'
His remarks come just one month into Mark Carney's tenure as the central bank's governor. Succeeding Sir Mervyn King, Carney's regime has already been punctuated by signs of recovery. One of his first major decisions surrounded Quantative Easing (QE), but the governor - credited with protecting Canada from slumping into the nadir of the financial crisis in one of his previous roles - elected to stick to the size of the current QE programme (£375bn), a move supported by bank experts.
Whilst the recession in the Eurozone worsens, the International Monetary Fund forecast that British GDP would see a 0.9% rise, largely due to a growth in consumption, as reported by CNN.
Britain is also currently enjoying a jingoistic atmosphere as the birth of Prince William and Duchess Kate's boy - George Alexander Louis, the third in line for the throne - has buoyed national sentiment, prompting retail sales.
Mr Cable's remarks, though, are largely down to the Bank of England's push for banks to build up high capital.
Anthony Browne, Chief Executive of the British Bankers' Association, backed this, explaining to BBC Radio 4's Today show that: 'The Bank of England financial policy committee has these counter-cyclical policy requirements. You push capital requirements up in a boom, you push them down when there's a recession.
'The trouble at the moment - and for the last five years - is that we've had this massive increase in capital amongst banks of £165bn during a time of low economic growth. Across the banking sector as a whole, there clearly is a correlation in the short term between requiring banks to massively upgrade the amount of capital they have and the amount of lending and the amount of economic growth.'
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