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Page last updated at 07:43 GMT, Friday, 15 June 2012 08:43 UK

Will bank lending plan work?


The government and the Bank of England have come up with a scheme to lend money to banks very cheaply on the condition they lend it on to businesses.

Shadow Chancellor Ed Balls says he welcomes any action in a recession but he says the problem is the confidence in the economy.

"Plan A isn't working," he told the Today programme. "Our chancellor's diagnosis has never been right and that's why it's not working."

Treasury Minister Mark Hoban says the scheme will be "attractive" to many businesses who are credit worthy.

"We want to send a very clear signal to businesses that finance is available at a price they can afford," he told Evan Davis.

He refused to admit whether the government's fiscal tightening policies were helping to fuel the recession but blamed instead "the scale of the financial boom and bust" and "the uncertainty of the eurozone".

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