Happy days are here again...not

So billions of pounds' more money is going to be thrown at business - with £76bn of it reserved for smaller firms! Yippee, all our problems are over, eh?

Afraid not. I was chatting to George Cowcher, the chief executive of Derbyshire and Notitnghamshire Chamber a few minutes ago and he says it isn't the amount of money that's the problem - it's the interest rate you have to pay on it.

But surely interest rates are on the deck, aren't they? Base rates are, yes - these are the rates on which the Bank of England is willing to lend. Then there's the inter-bank rate, which is the margin when cash shifts between financial institutions. Then there's the rates ordinary joes in business and on the street pay.

Right now, they are a long way north of that pitifully low base rate. Borrowing at a commercial rate is very expensive.

So, banks are still acting like a load of money-grabbing vultures, then? Sorry, but that isn't a fair picture either.
Banks are making a proper commercial assessment of the ability of lenders to pay back loans. In the current economic climate the risk of default is bound to be higher (as the insolvency and business failure rates continue to show).

So a prudently-run financial institution will put a higher price on the loan to make sure the risk of loss is overcome earlier in the loan's life.

As Cowcher points out, this is what banks didn't do before the credit crunch. And look where that got us - banks still have billions of rotten loans sitting on their books to this day (and many of these distressed loans will probably be terminated this year).

Only if the government was willing to underwrite some of this business lending is it likely that the amount handed over would increase significantly. A government grappling with deficit and debt - and politically committed to so-called 'sound' money - is unlikely to do that.

So, we are where we are and George Osborne's statement today doesn't change that.

That doesn't mean businesses are necessarily caught in a financial Catch-22. There are plenty of small and medium-sized firms out thdere - particularly older, family-owned enterprises - who never over-borrowed in the good times because their cultural outlook says it's wrong to 'work for the bank'.

They have money sitting in the bank, where it's probably not doing much for them. If they are in manufacturing, this year may well be the year when they do invest in prudent expansion.

And many will do it without borrowing a penny.