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UK government is looking at £20 billion of loan guarantees

As Gordon Brown digs deeper and deeper to try and refloat the UK economy it has been revealed that this Wednesday should see a £20 billion small business loan guarantee system announced to the public. There have been a number of hints by the government over the last few weeks regarding such a scheme although the Conservative party believe that a figure of up to £50 billion is more useful in the current environment.

In return for a fee the state will ensure loans from banks to small businesses thereby ensuring that the UK banking system would not lose out should the businesses go under. This is however a significantly risky scheme as potentially £20 billion of taxpayer's money could be lost. As we have hinted in a number of our recent post, there is significant concern that the government needs to take such potential action even though literally hundreds of billions of pounds have already been poured into the banking system.

Maybe when we start to see one of the many rescue packages actually take off, the government may then see a reduction in criticism but at this moment in time taxpayers are growing more and more concerned about excessive spending.

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