UK: BCC chief challenges new Bank of England boss Mark Carney to help the ‘real economy’
The head of Britain’s chambers of commerce movement has urged new Bank of England governor Mark Carney to more to ensure a stable business environment, to helpng to secure the UK’s future competitiveness.
In an open letter to Mr Carney, who officially took over the role from Sir Mervyn King yesterday, John Longworth, chief executive of British Chambers of Commerce, called for a Business Bank to be capitalised and for existing schemes, such as Quantitative Easing and the Funding for Lending Scheme to go further in order to support businesses in the real economy.
In the letter, Mr Longworth says to Mr Carney: “There is no doubt that the economic situation today is better than when your appointment was first announced.
“Yet while we are seeing signs of a stronger recovery across the business community, we have no illusions about the challenges ahead for the UK economy, nor the complexity that you and your colleagues on the MPC will face in shaping monetary policy.
“That said, we believe that the Bank of England can take real action under your leadership to help entrench that recovery and secure our future competitiveness – by helping to secure the flow of finance to the new, growing and dynamic businesses that need it most.”
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Mr Longworth says the Business Bank should be capitalised as “a major new player in SME finance”, working with and alongside private financial institutions to unlock new sources of patient growth capital and risk capital, added: “We are struck by the success and importance of the Business Development Bank of Canada in your native country, and hope that you can help the Business Bank to develop a similar vision and remit.”
He also says that existing programmes could better support the real economy. “We believe you can help stimulate lending to businesses by making the Funding for Lending Scheme more effective and by widening the existing Quantitative Easing programme to include the purchase private-sector assets including securitised SME debt (rather than just gilts),” says Mr Longworth.
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His letter also calls on the new governor to “lever in private investment in UK infrastructure, working together with the Treasury” and to focus on ensuring a stable business environment.
“This can be done by giving business as much certainty as possible on low interest rates, which have played a critical role in underpinning both business and consumer demand,” he adds. “
“At the same time, BCC’s Quarterly Economic Survey shows that inflation is a significant concern for companies across the economy. The MPC’s decision-making must take both of these important business concerns into account.”