The Spectator

A precarious state

The Spectator on the Government's latest measures to combat the credit crunch

issue 17 January 2009

It is human nature that some of the most red-blooded capitalists, who during the good times used to froth at the mouth at the thought of any kind of public expenditure, are among those now shouting loudest for help from the taxpayer. The most vociferous criticism of Lord Mandelson’s plan to guarantee loans for small businesses revolves around the assertion that it does not go far enough, promising £20 billion worth of capital compared with a similar, £50 billion scheme proposed by the Conservatives last month. There has been rather less complaint about the principle of bailing out private businesses and what it means for the future of enterprise.

We broadly welcome an emergency scheme which will help otherwise sound businesses survive the current constriction on credit. Businesses, especially small businesses, have been treated appallingly by the banks since the credit crunch began. It is one thing when businesses fail because they cannot afford the interest repayments on their debts; it is quite another when banks condemn businesses to bankruptcy by calling in debts even when repayments are being met.

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