Brown hints at more steps to get credit flowing

Prime Minister Gordon Brown said Wednesday that further measures may be needed to encourage banks to resume a normal flow of credit to small British businesses and homeowners.

Brown came under pressure Wednesday from opposition lawmakers who complained that the government's 37 billion pound ($55.5 billion) recapitalization program for banks had not yet eased the flow of credit.

Brown said the government was monitoring banking activity, and meeting frequently with bankers to try to resolve issues which continue to restrict credit during the global financial crisis.

"We are ready to take further measures if necessary," Brown said.

Brown's spokesman Michael Ellam told reporters new measures are likely to be announced on Monday, when treasury chief Alistair Darling publishes his pre-budget review.

"This is obviously something we keep under constant review, that's something that the chancellor (Darling) will address in his pre-budget review," Ellam said.

The government's plan to inject capital into banks by taking equity stakes was taken up by HBOS, Lloyds and Royal Bank of Scotland Group PLC last month.

"We are in discussion with the banks ... about, first of all, how HBOS, Lloyds TSB and Royal Bank of Scotland can achieve their promise that they will have activity for lending and marketing of lending at the level of 2007. Secondly, how all the banks can resume funding," Brown said.

"We will be bringing forward proposals very soon," he added.

Brown said the government had expanded a small business loan program and noted that the Bank of England had slashed the base interest rate from 4.5 percent to 3 percent.

"That must flow through to small businesses as it has to homeowners," Brown said of the rate cut.