Business Secretary Vince Cable has warned of a second credit crunch if bank lending does not begin to flow across the economy.
Cable says the UK's economic recovery is at risk of being undermined by the lack of lending to businesses, with Britain's already posting sluggish growth of just 0.3% in the first three months of the year.
"We could have a second credit crunch if we don't get credit flowing, there is a real danger that growth in the economy could be undermined," Cable told the Independent on Sunday.
"It's what I hear most from the businessmen and women I speak to, that the flow of credit and lending to business is still weak. Demand is already depressed, and the danger is that the lack of lending could depress it still further."
Cable says the Government is also working at ways to try and get more equity funding into businesses.
"We are still identifying new measures, but it's important because the effects of quantitative easing will soon be wearing off," he says.
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