How other countries encourage lending

Encouraging banks to lend to cash-starved small businesses is a problem vexing governments across the world. Some of those addressing the issue include:

The prime minister Gordon Brown last week unveiled a package of measures to push banks to supply finance to the private sector. Among the measures announced are pledging insurance against banks losing more money from the bad debts they built up during the credit crunch and enabling the Bank of England to buy assets direct from firms. Mr Brown had previously promised to take steps to ensure that banks part-nationalised during the financial crisis - which include HBOS, Lloyds TSB Group and Royal Bank of Scotland Group - spur lending.

Faced with an unemployment rate at 10 per cent, the US President Barack Obama has pledged to do all he can to reignite jobs growth. Ensuring banks make more loans to small businesses and tax cuts to encourage companies to hire new workers are among the policy options he is considering. The US$787 billion (Dh2.89 trillion) stimulus package approved by Mr Obama last year, helped save 2 million jobs, according to data from the White House. As part of efforts to create more jobs, the House of Representatives last month gave its approval to another $155bn jobs package. Businesses shed a further 85,000 jobs last month, as the hangover of the financial crisis continues to hamper the economy.

Beijing this month unveiled a stimulus package for its vehicle sector, including a tax cut, as it looks to promote the mass production of electric cars.

It is also expected to approve supportive policies for eight other industries including shipbuilding, petrochemicals and textiles. The country last month raised tax rebates for a number of exporters of key products such as high-tech and electronic products and motorcycles to revive stuttering export growth. It followed similar rebates for companies exporting rubber and wood products, glassware, clothing, furniture and aluminium materials.

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