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Has finance for the business sector really taken a hit?

Today's meeting between Alistair Darling and UK banking leaders, together with a posse of government advisers and ministers, has revealed how the financial situation in the UK has changed significantly over the last two years. The Chancellor of the Exchequer presented specific data to the meeting which seems to indicate that banking liquidity for small and medium-size businesses has become more expensive even though UK base rates are stuck at 0.5%.

Indeed, one of the more startling pieces of information was the fact that one in 50 medium-size companies were paying more than 9% above base rates in 2007 while the figure today is more like one in 3. This fact alone is something which will embarrass the UK banking industry although they will no doubt come back with the same line that bad debts are rising, finances is more expensive in the money markets and the risks associated with the UK small and medium-size business arena are still very high.

While the tone of the meeting were said to be amicable and constructive, there is no doubt that we have two immovable forces in the UK banking sector and the UK government. It will be interesting to see if they are able to find any middle ground because at this moment in time neither party seems interested in negotiation.

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