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2015 OECD Economic Surveys: United Kingdom 2015

image of OECD Economic Surveys: United Kingdom 2015

This OECD Economic Survey of the United Kingdom examines recent economic developments, policies and prospects. Special chapters cover improving infrastructure and ensuring sustainable bank lending.

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Enhancing the financing of the real economy and financial stability

The banking sector in the United Kingdom (UK) was deeply affected by the crisis. Bank credit has collapsed reflecting both weak demand and tighter supply. New prudential requirements have improved the resilience of the banking sector and a number of measures were taken to support credit supply. These included conventional and unconventional monetary policies, policies to address credit constraints with Help to Buy and Funding for Lending programmes, and a number of public programmes to improve access to finance united under the roof of the British Business Bank. Further structural reforms are needed to improve competition in the SME credit market and to boost credit provision to SMEs in the medium term. Sustainable financing of the economy and greater financial stability should be achieved by sound regulation, ensuring high capital requirements for systemically important banks, improving banks’ resolvability and fine-tuning the use of countercyclical measures. Data should be collected on a wider set of financial institutions than currently done and macro-prudential regulation should be gradually extended beyond the banking sector to prevent the migration of systemic risks.

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