Business secretary Vince Cable has urged the government to make failed bank Royal Bank of Scotland (RBS) a state-run business lender.
In a leaked letter to Prime Minister David Cameron and deputy Nick Clegg, Cable said the after effects of the 2008 crash could "choke off" recovery as banks fail to lend to businesses.
"My suggestion is that we recognise that RBS cannot return to the market in its current shape and use it this time as a ward of the state to carve out of it a British Business Bank with a clean balance sheet and a mandate to extend lending rapidly to sound businesses," Cable wrote.
After lending to small and medium enterprises (SMEs), Cable said the bank could be used to prop up exports and "sectors identified as of strategic importance".
Cable said the government lacked "a compelling vision of where the country is heading beyond sorting out the financial mess" and urged Cameron and Clegg to make long term plans for the economy that stretch to after the 2015 election.
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