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| Darling 'to force banks to lend' | Darling 'to force banks to lend' |
| (10 minutes later) | |
| Chancellor Alistair Darling could force banks to lend to small firms hit by the credit crunch, press reports say. | Chancellor Alistair Darling could force banks to lend to small firms hit by the credit crunch, press reports say. |
| Mr Darling is said to be considering a cap on interest rates on small business loans as part of a package of measures aimed at kick starting the economy. | Mr Darling is said to be considering a cap on interest rates on small business loans as part of a package of measures aimed at kick starting the economy. |
| He is expected to unveil tax cuts and increased public spending in his pre-Budget report on Monday. | He is expected to unveil tax cuts and increased public spending in his pre-Budget report on Monday. |
| Bu he may also be forced to announce deferred tax rises and spending cuts due to ballooning debt, the FT says. | Bu he may also be forced to announce deferred tax rises and spending cuts due to ballooning debt, the FT says. |
| The Financial Times says Treasury officials believe the "mammoth shock" to the economy as annual borrowing heads towards £120bn will cause tax revenues to fall far below previous estimates. | The Financial Times says Treasury officials believe the "mammoth shock" to the economy as annual borrowing heads towards £120bn will cause tax revenues to fall far below previous estimates. |
| BBC's Nick Robinson and Hugh Pym discuss likely measures in the PBR | BBC's Nick Robinson and Hugh Pym discuss likely measures in the PBR |
| The Conservatives have spoken out against the government's plans for a temporary "fiscal stimulus" warning that it could lead to tax increases later. | The Conservatives have spoken out against the government's plans for a temporary "fiscal stimulus" warning that it could lead to tax increases later. |
| But ministers say it is necessary to stave off recession and is in line with action being taken by other major industrialised nations. | But ministers say it is necessary to stave off recession and is in line with action being taken by other major industrialised nations. |
| 'Nuclear option' | 'Nuclear option' |
| The government is also under pressure to come to the aid of small businesses amid growing anger at the apparent reluctance of banks to pass on cuts in interest rates to mortgage holders or free up credit to small businesses - particularly after several took part in the government's £37bn bailout scheme. | The government is also under pressure to come to the aid of small businesses amid growing anger at the apparent reluctance of banks to pass on cuts in interest rates to mortgage holders or free up credit to small businesses - particularly after several took part in the government's £37bn bailout scheme. |
| MPs from all parties are thought to have been bombarded with letters from businesses saying banks are refusing to lend to them. | MPs from all parties are thought to have been bombarded with letters from businesses saying banks are refusing to lend to them. |
| According to reports in the Daily Mail and the Daily Telegraph, Mr Darling is preparing to underwrite small business loans in his pre-Budget report and may legislate to make the banks free up credit. | According to reports in the Daily Mail and the Daily Telegraph, Mr Darling is preparing to underwrite small business loans in his pre-Budget report and may legislate to make the banks free up credit. |
| Despite having been pulled back from the brink, the banks appear reluctant to launch their sizeable recapitalisation lifeboat and start lending again to households and businesses John McFall | Despite having been pulled back from the brink, the banks appear reluctant to launch their sizeable recapitalisation lifeboat and start lending again to households and businesses John McFall |
| Shadow Chancellor George Osborne has said a Conservative government would also step in to guarantee loans made by banks and would even loan money directly to businesses as a "radical" last resort. | Shadow Chancellor George Osborne has said a Conservative government would also step in to guarantee loans made by banks and would even loan money directly to businesses as a "radical" last resort. |
| The Liberal Democrats have also said the government should lend directly to businesses, through the Post Office, local authorities or even by creating an entirely new government-owned bank. | The Liberal Democrats have also said the government should lend directly to businesses, through the Post Office, local authorities or even by creating an entirely new government-owned bank. |
| Labour MP John McFall, chairman the Treasury select committee, said the major banks should be threatened with full-scale nationalisation if they failed to comply. | Labour MP John McFall, chairman the Treasury select committee, said the major banks should be threatened with full-scale nationalisation if they failed to comply. |
| "Despite having been pulled back from the brink, the banks appear reluctant to launch their sizeable recapitalisation lifeboat and start lending again to households and businesses," Mr McFall said. | |
| "It would seem that they are instead navel gazing and looking warily at each other instead of concentrating on their customers, many of whom are still in peril on a sea of uncertainty." | "It would seem that they are instead navel gazing and looking warily at each other instead of concentrating on their customers, many of whom are still in peril on a sea of uncertainty." |
| Mr McFall said that if the banks fail to comply, there could be "nuclear option" of nationalisation. | Mr McFall said that if the banks fail to comply, there could be "nuclear option" of nationalisation. |
| But Angela Knight, of the British Bankers' Association, told BBC Radio 4's Today programme that banks had to keep capital as a safety net, and the money some banks were given by the government was "to absorb losses". | But Angela Knight, of the British Bankers' Association, told BBC Radio 4's Today programme that banks had to keep capital as a safety net, and the money some banks were given by the government was "to absorb losses". |
| She insisted that banks were still lending money. | She insisted that banks were still lending money. |