Prime Minister David Cameron’s office said 38 large companies in the U.K. will look at taking part in a program to help their suppliers gain access to credit as part of efforts to boost lending in the economy.
The companies, including Tesco Plc and BAE Systems Plc, agreed to evaluate a “supply-chain finance” initiative at a meeting in Cameron’s residence in central London today, his office said in an e-mailed statement. This requires the company buying goods or services to notify its supplier’s bank that invoices have been approved for payment. The supplier can then borrow against those invoices.
Cameron’s office estimates the move might see as much as 20 billion pounds ($32 billion) of cheaper finance released. Business Secretary Vince Cable said last month that the government had struggled to increase lending to smaller businesses, holding back the economy, with banks trying to reduce their exposure to risks and reluctant to lend against commercial property.
“This government is determined to back all those businesses who aspire to get ahead and take on more people,” Cameron said in the statement. “In the current climate, viable businesses can struggle to get the finance they need to grow -- this scheme will not only help them secure finance and support cash flow, but will help secure supply chains for some of our biggest companies and protect thousands of jobs.”
Among the other companies to sign up were Boeing Co., International Business Machines Corp., Marks & Spencer Plc and Statoil ASA, Cameron’s office said.
The government is looking at where it can adopt the system itself, starting with neighborhood pharmacies, who supply medicines on behalf of the state-funded National Health Service.