A business bank designed to increase lending to firms in the UK needs £40 billion in order to operate successfully, think tank IPPR has claimed.
According to the body, the government-backed scheme should be allowed to invest in projects including road building in a bid to improve economic conditions across the country.
The initiative, which has been planned by business secretary Vince Cable, will also need to tap bond markets for upwards of £100 billion if it is to benefit firms across the UK.
IPPR made its comments after Mr Cable announced the launch of the bank last week, stating that he hopes it will "shake up the market" by increasing lending to struggling firms.
However, the think tank argued that because the government has not been given any money to increase economic activity, the official has been "reduced to indirect schemes" to support growth.
Tony Dolphin, chief economist of the IPPR, said: "What we need in the UK is a fully-fledged British investment bank designed to suit the particular circumstances of our economy."
Find the latest spread betting strategies for the FTSE 100 at City Index.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.