Financial sector 'still set to struggle'

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Financial sector 'still set to struggle'

Fri 30th Oct 2009

The Bank of England must add more support to the financial sector because it will not be able to recover on its own, a spokesperson from a thinktank has suggested.

Tony Dolphin, senior economist at the Institute of Public Policy Research, claimed that originally the banks were quite reluctant to lend, which affected their income.

However, now he believes the issue is that people no longer have an appetite for borrowing.

Mr Dolphin also noted that banks and building societies have needed to pay off recent losses, so funds have had to be diverted to achieve this.

He explained: "It is still rebuilding its capital base. The evidence from surveys is that it is still not making credit available to the economy in a quantity that would be regarded as normal."

In a speech made by Adam Posen, an external member of the Monetary Policy Committee, it was suggested that the financial sector will not be able to support economic recovery in the UK.

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