The Government will underwrite up to £50 billion of investment in UK infrastructure and exports, under plans unveiled by George Osborne today.
The Chancellor said he was using the coalition's "hard won fiscal credibility" to free up private sector funds and kick-start the economy.
The initiative comes amid pressure on ministers to support the UK by loosening the purse strings.
Earlier this week the IMF again cut the country's growth forecasts to just 0.2% for 2012. However, the move is likely to fuel criticism that the British taxpayer is taking on liabilities that the private sector considers too risky.
What the Government is announcing today:
- Under the UK Guarantees scheme, up to £40 billion of funding will be underwritten for critical infrastructure projects that have stalled due to difficulties raising money from private investors.
- The Government will charge for helping secure finance for the projects, which could be in sectors such as transport, energy, communications, and education.
- Applicants will have to meet criteria including being ready to start construction within 12 months, having a positive impact on economic growth, and giving good value for the taxpayer. The first guarantees are expected to be made in the autumn.
- The Government will also step in to ensure major Public Private Partnership (PPP) projects are not delayed. PPP schemes get all their up-front funding from the private sector.
Mr Osborne said of the plans:
Shadow chief treasury secretary Rachel Reeves said the proposals did "not go far enough":
- Read our Economics Editor Richard Edgar's blog on the Government's announcement today: George Osborne unveils another 'big bazooka'.