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UK recovery at risk because of reduced credit

The International Monetary Fund (IMF) has again stepped in to kick the UK economy when it is down. The association believes that the UK, more than any other developed country in the world, is at risk over the next few years from reduced levels of credit for both consumers and businesses. It is estimated there will be a shortfall of £280 billion this year between required loans and liquidity available, dropping to £150 billion next year. So what can the government do to relieve the pressure?



Unfortunately, the UK government and the UK regulators have tried many tricks and many strategies to encourage UK banks to increase liquidity in the loan market. However, at this moment in time UK banks are adamant that they want to see a recovery in the economy before they inject further liquidity into the system, creating the ultimate "chicken and the egg" scenario.



There is no doubt that the inability of consumers and businesses to refinance their operations and their personal situations will cause havoc in the marketplace. The housing market could again grind to a halt, bankruptcies and other debt arrangements will continue to grow and more and more people will see their jobs in jeopardy.

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