Bank of England launches £80 billion scheme - Economy - News |

News News brings you the latest financial & economic news & reviews of the best products in the UK by our team of money experts.

Bank of England launches £80 billion scheme

Bank of England launches £80 billion scheme

Category: Economy

Updated: 13/07/2012
First Published: 13/07/2012

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The UK's banks and building societies are to be offered extra funding by the Bank of England to help boost lending.

The Funding for Lending Scheme, a multi-billion pound programme, aims to boost lending by banks and building societies to UK households and non-financial companies.

Under the scheme, the government will offer b
anks and building societies low cost funds at a fee of 0.75% above Bank Rate, currently 0.50%, over a four year period. This is under the condition that the money is used to offer lower and more accessible loan and mortgage rates.

The Bank of England is hoping that the new initiative will give lenders the incentive to free-up funding. Banks have been storing cash to assist their balance sheets as the economic crisis continues.

The Chancellor George Osborne said that he hoped the scheme would help households and businesses "at a challenging time". In a letter addressed to the governor of the Bank of England, Sir Mervyn King, Mr Osborne said "the scheme will support the flow of credit to where it is needed, complementing the MPC's asset purchase programme in easing monetary policy conditions".

The Funding for Lending Scheme, due to begin next month, follows an announcement by the Bank last week that a further £50 billion will be injected into the UK's economy as part of the quantitative easing (QE) programme.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.