Banks 'restricting chances of UK growth'

28 March 2012

Britain will not be in a position to return to strong levels of growth in the near future due to the fact the country's banks are still focused on reducing their balance sheets.

That is according to Mervyn King, governor of the Bank of England (BoE), who believes the UK still faces a long and arduous path towards recapturing its expansion rate seen prior to the onset of the global financial downturn.

During a speech delivered at the House of Lords Economic Committee, Mr King insisted that while there is "no economic reason" why the nation cannot experience such performance again in the long term, it will "take some time" before that is possible.

He went on to say that a major factor behind the probability of growth being slow is the fact "banks clearly face pressure in funding markets to reduce leverage".

Meanwhile, Mr King's BoE colleague Adam Posen told the National Institute of Economic and Social Research that a lack of credit from financiers is stunting the country's growth prospects.

By Gary Cooper

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