UK government monitoring bank lending

The UK government has today stepped into the limelight with regards to bank lending and warned the UK banking arena that lending to small, medium and large sized businesses must improve. This comes at a time when the UK government is looking towards the small business arena to take up any slack left by reductions in the public sector budget, something this has not been happening of late. So will the UK government be able to influence bank lending in the UK?

The government has a number of potential sticks and carrots to use in relation to the UK banking arena, with further taxes and regulations regarding bonuses and remuneration packages perhaps two areas which will focus the minds of UK banks. This comes at a time and UK taxpayers are becoming more and more annoyed that despite bailing out the UK banking system to the tune of billions of pounds last year there has been little in the way of improvement in consumer and business markets.

Yet, at the same time, UK banks are today announcing record profits and record bonuses for many of their employees which is the last thing that the UK government would have hoped to see.