In coordinated announcements after the markets closed on Thursday, Chancellor George Osborne and Bank of England Governor Sir Mervyn King unveiled new measures to get the UK economy moving again. The centrepiece is a plan for the Bank to make £80 billion in new funding to the banking system, on condition that the cheap money is used to increase lending.
Wondering who will benefit from that? Well, let's look to the markets for a clue. In Friday's trading session, the overall FTSE eked out a 0.2% gain -- but shares in Royal Bank of Scotland surged 7.9%, while Lloyds TSB shares rose 5.2% and Barclays, 4.2%. Economists and pundits have been quick to pour cold water on the likely effectiveness of the scheme, and the banks have said all along that the reason lending has been growing so slowly is not that they are unwilling to lend, but that businesses and homebuyers are reluctant to borrow. Labour Shadow Chancellor Ed Balls's reaction seems about right: "If business is not investing and creating jobs and if our economy is not growing, that's the fundamental problem, and I've said consistently for two years that you can't do this simply by throwing money at the banks."
Of course, none of that will stop the banks from scooping up the lolly. If you see the lights on late in the City and at Canary Wharf this weekend, that'll be teams of accountants trying to figure out how to assign the new funding to loans they were going to make anyway.
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