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CBI leader attacks Lord Turner

While Lord Turner, the chairman of the FSA (Financial Services Authority), has had the headlines all his own way over the last week or so, today saw a fightback from UK businesses led by CBI director general Richard Lambert. Mr Lambert criticised Lord Turner for directing his anger towards banking bonuses and banking taxes when the real problem is a reduction in liquidity in both the consumer and the business arena.

The comments, which have significant backing from the business sector, make perfect sense because while the battle against banking bonuses continues, liquidity has not improved in either the consumer or business arena. As we have mentioned on many occasions, there is no way that a full-blown recovery can take place in UK economy without an increase in mortgage liquidity and business liquidity. At this moment in time the UK banking arena, for some reason, is unwilling or unable to increase mortgage liquidity in particular.

Richard Lambert is perfectly correct in his comments that the bonus and tax arguments regarding the city are taking away the emphasis from the real problem which is a distinct lack of liquidity. Until this issue is addressed the UK economy will struggle to keep pace with other European economies which are recovering.

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