University of Sheffield professor of political analysis Colin Hay argued banks were using high interest rates on mortgages and commercial loans to recapitalise, and that such practices were an ‘intolerable’ drain on the prospect for economic growth.
Dr Hay, who is also the co-director of the Sheffield Political Economy Research Institute, wrote: “Arguably at least half of each British mortgage holder’s monthly debt repayment at present takes the form of a tacit bank recapitalisation charge.
“This is both intolerable and a significant drain on the growth prospects of the commercial and consumer economy.
“The banks need to be named and shamed and held publicly to account for their behaviour.”
As well as pressurising banks to change their behaviour, he advocated more public investment, the creation of ‘growth bonds’ or government debt earmarked for public infrastructure projects, making deficit reduction conditional on growth and more international co-ordination on managing debt and growth.
A British Bankers’ Association said: “The Bank of England’s first Credit Conditions Survey of the year reported that the amount of credit being provided to individuals and businesses is increasing and also provided further evidence that the banks participating in the Funding for Lending Scheme are successfully passing on the benefits through cheaper finance.
“The banks are committed to playing their part in restoring financial stability and encouraging the continued economic recovery, and a key part of that is ensuring finance is available to stimulate growth.”
