The UK government would appear to have turned the screw on the Royal Bank of Scotland, which is 84% state-owned. The bank has today confirmed that it will cap business arrangement fees for loans and overdrafts at 1.5% for at least the next 12 months at a time when small businesses in the UK (i.e. those with turnover below £25 million) are struggling. So what's does this really mean for UK business?

While there is no doubt a capping of charges at 1.5% would allow businesses in the UK to plan further ahead without concerns about increasing fees, many banks at the moment do actually charge less than 1.5%. However, these banks which currently charge less than 1.5% reserve the right to amend their rates each and every quarter which has and does cause concern to some UK businesses.

Even though this is obviously a step forward, we really need to see an increase in liquidity in the UK marketplace. Whether the UK government will attempt to place more pressure on Royal Bank of Scotland in the short to medium term and ensure it increases liquidity is something which many business leaders and taxpayers are wondering at this very moment.

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