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Ed Miliband Is Showing the Way on Banking Reform

Labour’s proposal today for a network of regional banks serving local businesses is welcomed by Civitas, the independent Westminster think tank.

Civitas has produced extensive research and long advocated a move towards a model based on the German Sparkassen, which promotes relationship banking and has proved highly successful in helping small firms get the finance they need.

The Sparkassen grew their lending by 17% between 2006 and 2011 while Germany’s big commercial banks reduced their own lending by almost 10%.

David Green, director of Civitas, said: “Britain has been too reliant on big commercial banks that are just not doing enough to help small firms grow and fire the economy.

“A network of regional banks that has a better understanding of their local economies and businesses has the potential to dramatically improve the flow of finance to small and medium-sized enterprises.

“The Sparkassen were a major factor in helping Germany bounce back from the recession so much more quickly than the UK, which has been held back by the coalition Government’s miserable failure to learn the most obvious lessons from overseas.

“Labour is showing the way to the present Government, which has shown no imagination in tackling the problems facing SMEs and has ignored too many good ideas.”

Notes

Links to Civitas research into the German Sparkassen and the benefits of an equivalent system in the UK:

German savings banks and Swiss cantonal banks, lessons for the UK (Stephen Clarke – December 2010)

The German Sparkassen (Christopher Simpson – January 2013)

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