Government-funded bank set to benefit manufacturing SMEs

According to a statement, the new bank will aim to attract private-sector funding so that when fully operational it could support up to £10bn of new and additional business lending.

The government says it will build a single institution designed to address long-standing structural gaps in the supply of finance, as identified in Tim Breedon’s report on non-bank finance.

It is expected to bring together in one place government finance support for SMEs and it will also control the government’s interests in a new wholesale funding mechanism, which will be developed to unlock institutional investment to benefit small businesses.

Cable said: ‘For decades, British industry has lacked the sort of diverse, long-term finance that is quite normal elsewhere.

‘We need a British business bank with a clean balance sheet and a mandate to expand lending rapidly, and we are now going to get it.

‘Alongside the private sector, the bank will get the market lending to manufacturers, exporters and growth companies that so desperately need support. It will be a lasting monument to our determination to reshape finance so it can finally serve industry the way it should. Its success will not be the scale of its own direct interventions but how far it shakes up the market in business finance and helps to ease constraints for high-growth firms.