Banks must lend to avoid steep recession

26 November 2008

Mervyn King, the governor of the Bank of England, has warned that banks must resume lending if the economy is not to decline further.

Mr King was answering questions posed by the Commons Treasury Select Committee.

He argued that a pick-up in lending levels is “more important than anything else at the moment”.

The government, he said, may have to act directly to push extra lending and he refused to rule out the nationalisation of the banks as a last resort.