Chancellor shores up the banks with £100 billion | The Times

via Chancellor shores up the banks with £100 billion | The Times.

Britain’s stricken economy was thrown a lifeline of at least £100 billion yesterday as the Government scrambled to prevent a new credit crunch.

In the most significant response to date to the threat of a euro breakup, the Chancellor and the Governor of the Bank of England offered tens of billions of pounds to banks to boost lending and help the sector to protect itself against a Greek exit.

George Osborne said that the move proved that Britain was not powerless in the face of the eurozone crisis. “The Government, with the help of the Bank of England, will not stand on the sidelines and do nothing as the storm gathers,” he told a dinner at the Mansion House in the City of London. (George Osborne’s speech in full)

Sir Mervyn King said that the authorities were being forced to respond to a crisis that had “grown to cast a long shadow over our own recovery”. (Sir Mervyn King’s speech in full)

The aim of the scheme is to provide emergency protection for banks while underpinning lending and curbing the costs of mortgages and business loans.

The decision to provide long-term funding to British banks represents an about-turn by the Governor, who has previously insisted that the quantitative easing (QE) programme was the right way to boost the economy.