Britain rules out new banks "bailout"

5 January 2009

The government is looking at new ways of getting banks to increase their lending but it will not be considering a second "bailout" of the country's financial institutions using taxpayers' money, the prime minister has said.

In a BBC interview cited by Reuters, Gordon Brown said another round of recapitalization was not on his mind - although he is "urgently" seeking a solution to the problem of constricted credit.

Last October, the government said it would inject around £37 billion into three lenders - the Royal Bank of Scotland, Lloyds TSB and HBOS.

On Sunday, both the BBC and the Times reported that ministers are considering making more funds available as so far their stimulus packages have not restored lending levels.

However, chancellor Alistair Darling said that while he wants a plan for increasing lending in place within the next few weeks, another bailout would not be the "first port of call".

Elsewhere, the prime minister has pledge to create 100,000 new jobs through public sector projects as part of the country's plan to battle the recession.

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