'Credit easing' could reverse finance issues for games studios
Small and medium-sized businesses across the UK could soon take advantage of a new multi-billion pound “credit easing” scheme, the Treasury has announced.
The Chancellor, George Osborne, yesterday outlined a new plan to underwrite loans for UK firms by buying corporate bonds – essentially “business IOUs” – as credit lines from banks remain jammed.
The policy is in early consultation, but in theory it would involve the government bypassing banks and directly attaching credit lines to small and medium sized companies.
The Treasury’s new plan comes amid a crisis in confidence across the Eurozone, with institutions fearing a full-scale credit crunch. Credit easing, would, in theory, maintain the supply of loans even if bank-lending conditions worsened.
A new survey of more than 80 UK games studios found that the state of the economy was the industry’s primary concern, though the availability of credit for business ranked high.
No concrete details on ‘credit easing’ will be available until November. However, the BBC has discovered the policy would initially result in bonds issued by big companies.
The Treasury “would probably only undertake to purchase these bonds in the event of a further worsening in the Eurozone's financial crisis”, the report said.
The wider government plan is to encourage the creation of bonds for small businesses and thus create a market for them, the BBC said.
Treasury officials claim that such bond purchases would not add to the UK's deficit or the national debt.
Yesterday, speaking at the annual Conservative Party Conference, Osborne said he has deeply considered all possible policies for UK recovery.
He announced a freeze on council tax but said no other tax cuts would be planned.
"Right now, temporary tax cuts or more spending are two sides of exactly the same coin, a coin that has to be borrowed - more debt that has to be paid off,” he said.