10 Mar

Credit drought 'will ease' - PM

Gordon Brown has said he believes the credit drought will "start to ease" in the next few months as banks increase their lending to businesses.

Mr Brown said recent agreements with RBS and Lloyds Banking Group meant they now had a "duty" to lend more freely.

Ministers were working "night and day" to fix the banking system whose failure was "rather unique", he told the BBC.

Mr Brown said he took "responsibility" for the state of the economy but said the crisis was global, not domestic.

'Real problem'

The Conservatives have persistently called for the prime minister to apologise for the recession, saying his policy failures while chancellor left the UK more vulnerable than other countries.

In an interview with BBC Radio 4 Live's You and Yours show, Mr Brown said he would not "shy away" from any of the decisions he had made over the last 11 years as chancellor and prime minister.

But he said the financial crisis was global in its origin and had not been caused, as in the past, by governments letting inflation and interest getting out of control at home.

"I take full responsibility for what happens but what I can't say to people is that the cause of the crisis is something that happened within Britain alone," he said.

"This is something which happened right round the world. We can't find a solution unless we know we have got to sort out the banking system right across the world."

Responding to accusations that banks were still not lending despite getting billions in taxpayer support, Mr Brown admitted the amount of credit available was not "enough".

The lack of credit was a "real, real problem" and was affecting all areas of industry.

Proper job

But he said recent agreements with RBS and Lloyds Banking Group, combined with guaranteed support from Northern Rock, would ensure that more than £40bn in additional financing would come on stream for hard-pressed businesses and home-buyers.

"The answer is to get the banks to do the job they should have done," he said before adding that a lot of lending in the UK had come from foreign banks - including Icelandic ones.

Restoring credit conditions to normal would take time, he added, but Mr Brown said he expected the picture to gradually improve.

"The injection of money into the economy is such and the cuts in interest rates are such and the support given to help people through these difficult times that it will have an effect."

He added: "I think you'll find the situation for the businesses you are dealing with will start to ease over the next few months as more money becomes available for lending by the banks."

He also pledged help for savers hit by the collapse in interest rates with information for people wanting to shop around and find the best rates on the market.

This followed figures from the Bank of England showing that the average interest rate for savers who want instant access to their money is now barely above zero.

Article from bbc.co.uk/news Tuesday 10th March 2009