Excess at Expense of Small Business Lending Could Lead to Bank Tax
British banks could face a tax on profits if they fail to promote lending to smaller businesses, this was the warning delivered by Business Secretary Vince Cable yesterday as the government seeks to encourage the flow of money to businesses through a boost in lending.
Highlighted as one of the sticks that could be used to boost bank lending, the tax on profits would appear to be aimed at those banking institutions who pay excessive dividends and bonuses yet fail to promote lending to smaller businesses.
This latest rattle of the saber follows Mr Cable pledge to enforce business lending in June, with the tough new rules being attached to business loans coming under fire in a speech to the Cass Business School last month in which he said:
ΓÇ£The banks claim that there is no demand. That is not right. If the bar is set too high, of course no-one is willing to jump.”
If ΓÇ£fairerΓÇ¥ lending terms can be encouraged then small businesses throughout the UK, many of which choose to base themselves in budget friendly serviced offices, could stand to benefit. Should this lending fail to materialise then Mr Cable has also warned that the continued economic recovery may be a risk.