New £300bn bank rescue package announced

The government have announced a £300bn rescue package for UK banks that it hopes will provide the required stimulus for levels of lending to increase.

The plan, announced today by Gordon Brown and Alistair Darling, has a raft of measures including a scheme that offers insurance against banks losing more money from previous toxic debts.

The banks will have to pay for the insurance but the government hopes that it will give the financial institutions the confidence to begin lending again.

Chancellor Alistair Darling told the press that banks using the insurance would have to make, "very specific legally binding agreements to lend more money."

In October 2007 the government bailed-out UK banks in a £37bn package, but many small businesses have still experienced difficulties in obtaining money from banks and have seen their overdrafts slashed and charges increased.

Small companies will be waiting to see in more detail what conditions the government are imposing on banks as part of the package to ensure that the money is re-distributed to provide much needed cash-flow.