LONDON: The UK government has struck a deal with Britain’s biggest high street banks to extend millions of pounds of lending to small businesses as part of broader plans to boost exports and buoy the economy after Brexit. Liam Fox, the Trade secretary, will announce on Wednesday a tie-up with Barclays, HSBC, Lloyds Banking Group, Royal Bank of Scotland and Santander to channel more funding to export-focused companies. The partnership is aimed at making finance more readily available to businesses and their suppliers in order to increase UK exports, which lag behind European countries such as Germany. Boosting exports is a key part of the UK government’s broader Brexit plan amid concerns that the domestic economy could weaken as a result of last year’s vote to leave the EU. The deal to be announced on Wednesday will give banks a government guarantee to reduce some of the risk that they take on by lending to smaller and, therefore, riskier companies.
The deal means banks can provide export-related trade finance, such as working capital loans and bonds required by overseas buyers, to SME customers. The guarantee involves UK Export Finance, a government body, taking on 80 per cent of the risk of the working capital loan or bond. Mr Fox said that providing finance “lifts a common barrier to exporting” and was aimed at helping small businesses “seize the global demand for British exports”. The funding will be available to exporters and is being extended to include their suppliers, which are typically smaller companies that might need finance to buy equipment or increase the number of employees to meet the demands of large exporters.