Deputy positive over state of the economy

“We shouldn’t get too excited by one quarter but looking over the past year it’s perhaps not as bad as the headline figures suggest,” Mr Tucker told The Journal, the Newcastle newspaper, where he was visiting local businesses.

“I think there’s a long way to go but there’s certainly reason for hope,” he added.

Mr Tucker said that an extended version of the Funding for Lending Scheme announced last week was not a “silver bullet”, but should show more effect on lending in six months.

He continued: “At the Bank of England we have to ensure we continue the economy’s recovery, consistent with keeping inflation under control.

“In the last week we extended our Funding for Lending scheme, a scheme we have making it easier for banks to lend to the mortgage market and small and medium enterprises, and we have increased the incentives for banks and non-bank lenders to lend to small and medium-sized companies because they are immensely important to the economy.

“So far it’s worked better for mortgages than it’s worked for businesses – I don’t think its success should be measured though by how much people borrow directly from us, but really how much we can affect the cost of finance from banks to companies and then the cost of finance from banks to companies.

“Now we will have to wait for a couple of quarters to wait and see what difference it makes.

“This is no silver bullet but we should do what we can to improve the supply of credit in the economy and I think this can be a real help.”

In February, Mr Tucker suggested high street banks could be charged a negative interest rate in a bid to encourage more lending to small businesses, an idea he now believes will not hap- pen.

“It’s most unlikely it would happen in the context of the debate within parliament but it’s important that we are open and that we should think about all sorts of things,” he said.

He added: “I wouldn’t want the public to think that we sit on our hands and know the answers to everything – we are always trying to think about new things.”