Nor are big banks good for the economy. They are not especially efficient as organisations, but they can lend enormously to allow companies to grow and invest – except that is not what they do. British bank lending is almost entirely mortgages, consumer credit, and commercial property lending. There is a tiny amount of working capital supplied to British companies, but almost no lending to support company innovation and investment. British banks never did this much, but they do even less today – an important reason why Britain has such an unbalanced economy and is slower to emerge from recession than others.
God will Willy ever get over his love affair with Rhineland capitalism?
It\’s true that British banks do not lend all that much to British companies for R&D and investment whereas German banks do to German companies. But this does not mean that British companies are starved of such funds. They simply raise them through either equity issues or bonds. Most of which are then held by insurance and pension companies.
Willy has been shouting for years that it should be the banks doing this job, not more free flowing markets. And he\’ll jump on absolutely any justification for his prejudices.