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."
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