Bank of England to unveil 'funding for lending' scheme The Government has little wriggle-room to increase its own spending to drive investment due to a political commitment to bring down the country's budget deficit. And while the BoE restarted its £375bn programme of government bond purchases with newly created money last week, it accepts that the most direct beneficiaries of this are companies big enough to bypass banks and raise capital direct from markets. The BoE and Treasury will announce details of the new scheme at 11am today. On Thursday, short sterling rate futures rallied on the news, in anticipation of lower interbank lending costs. Among the key details that analysts will be looking for is how much lending the scheme will support - some £80bn was suggested when the scheme was first mooted in Mr King's Mansion House speech last month - and how exactly the BoE and the Government can ensure banks pass on lower lending costs to companies. Asked by lawmakers about this last month, chief BoE economist Spencer Dale said a "fundamental design feature" would be that banks' access to the scheme would be tied to them increasing net lending to the rest of the economy. However, Mr King was more circumspect, saying he could give "no guarantee" that the scheme would in fact lead to more lending, and that this would depend on the health of the global economy. This could be a big problem, as Mr King himself has talked of the "great black cloud" of uncertainty linked to the eurozone debt crisis holding back business investment. Banks themselves say that it is this, rather than an inherent unwillingness to lend, that has thwarted the export and investment-driven recovery that the Government seeks. However, Michael Saunders, an economist at Citi, thought this was only true up to a point, and that Government measures were needed to narrow the gap between the rates at which banks were willing to lend and companies were willing to borrow. "So far the banks have basically run rings around the Government on this," he said. If you leave it just to the banks to decide who's creditworthy, then you probably leave the economy stagnant for many years to come.