Financial engineers find ways to bridge the funding gap
One of the more bad aspects of the credit crunch is that after years of easy credit banks are unable, or unwilling, to lend to businesses at the point in the economic cycle where private sector growth is desperately wanted. The lack of bank lending is exacerbated by the UK government’s measures, which will put more pressure on private sector firms struggling for a financial breathing space.
While much of this activity is independent of the government, ministers recognise the importance of small to medium-sized enterprises and start-ups, particularly in strategically important areas. As a result, the government is the £150m cornerstone investor in the UK Innovation Investment Fund.