Happy New Year. Surely, there are some reasons to be cheerful? Base rates are at historic lows, the FTSE 100 share index is on an upward trend again, even the pound has bounced back over the last few weeks against the euro and the dollar.

I’m sure most of you won’t be jumping for joy just yet. Despite the sprinkling of good news, UK plc is struggling to share the optimism clearly being felt across the Atlantic from a nation preparing for the Obama effect to kick in. Why’s that then? After all, base rates of 1.5% are a novelty in the 300-year history of the Bank of England. We’ve never had it so good. But what use are low interest rates if no-one is prepared to lend to you?

Let’s remember where all this started. This was a credit crunch rather than a recession. To a large extent it still is. If the banks were lending to businesses, the economy would still be moving. But the banks are confused by the signals they are getting from the government. You must have rock solid assets, says the government to the banks at one meeting, so they start saving and stop lending. You must start lending to businesses, says the government at the next meeting. No wonder the banks are paralysed.

There are signs that the government is recognising that pumping all that public money into the banks may have saved them from collapsing but it hasn’t kickstarted the economy. Why not cut out the middlemen and give the support to businesses instead? And I don’t mean dishing out billions to ailing car manufacturers. I’m talking about the thousands of small-to-medium firms out there, including m&e contractors, that face going bust because they are struggling to reschedule their existing bank loans, let alone seek new credit.

It’s time for the government to underwrite loans to businesses and get things moving again. Only a renewed flow of funds will stop the economy grinding to a halt.

Andrew Brister, Editor

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Electrical and Mechanical Contractor