A view from the house: Forcing banks to lend is not the answer

Jan 5 2009 By David Wilshire, MP for Spelthorne

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If reports about the poor business done by shops over Christmas are true, the Great British public has more sense than the Government.

People have no intention of making personal finances worse by spending more. Spare cash is better used paying off debt than saving 2% on the latest plasma television screen we would rather like but don't actually need.

If reports the Chancellor of the Exchequer is drawing up plans to lend banks even more of our money are true, he was wrong when claiming the original £37b he handed over would save our economy.

Sensibly banks used the cash to fill their black holes caused by debt defaults and thus prevent their bankruptcy resulting in savers losing all their money.

If reports the Prime Minister is planning to force banks to lend more are true, the economic outlook for 2009 is worse than I fear. Since he wants us to believe poor lending by banks is the cause of our troubles why should we believe making even more bad loans will rescue us?

If reports bankers expect interest rates to fall further are true, my mail bag will fill with pleas for help from distraught pensioners whose income has fallen by over 50%. The first heart-rending letters have already arrived.

I wish 2009's first article could be more cheerful but I have learned over the years you can only solve problems when you really understand them and what caused them.

We are suffering the inevitable results of individuals, government and banks borrowing too much and spending too much. History teaches that boom leads to bust. Claiming outherwise is as stupid as King Canute ordering the tide to go away.