Osborne splutters on with the wrong policy at the wrong time. No wonder the IMF aren’t impressed

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As the Guardian notes this morning:

George Osborne will announce an expansion of the Bank of England's £80bn funding for lending scheme (FLS) ahead of a visit to Britain by the International Monetary Fund next month, as he seeks to head off calls for a softening of government austerity plans.

High-street banks are to be given added incentives to extend credit to small and medium-sized businesses in an expansion to the scheme, due in the next fortnight.

Osborne really is clutching at straws. When will he realise it is not loans that are missing (although they have been hard to get for SMEs)? It is demand that is missing. The reality is that the vast majority of large companies have no credit issue at all as they are sitting on cash but they won't spend it because there is no demand in the economy to justify doing so.

But Osborne splutters on with the wrong policy at the wrong time. No wonder the IMF aren't impressed.