According to the five leading banks in the United Kingdom, the lending targets which were agreed as part of Project Merlin, will be met. Just over £100 billion was lent to businesses in the UK in the first six months of 2011, against the yearly target of £190 billion.

The yearly target for lending to small businesses was £76 billion, but only £37.4 billion was lent to Small and Medium Enterprise in the first six months of the year. The five main banks, HSBC, Barclays, Lloyds, Santander and Royal Bank of Scotland signed an agreement with the government, pledging to support the British economy with agreed lending targets. A spokesperson for the main banks says that the figures for the first half of the year demonstrates the commitment of the banks to help businesses to grow and invest. The banks also maintain that the weak economy has resulted in lower demand for credit.

A treasury spokesperson conveyed the positive reaction of the government to the figures, when he said:

“Today’s provisional results are a big improvement, with lending to small businesses up by 20 percent for quarter two compared to quarter one.”

However, the lending targets have been criticised by the Labour party, who consider them to be inadequate. According to director of policy at the British Chambers of Commerce, Adam Marshall the lending targets are only one aspect of the Merlin Project. It is crucial for the relationship between banks and SME’s to improve. He also spoke of the cost cutting measures which are being adopted by some of the banks, hoping that they don’t have consequences for the relationship between banks and businesses.

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Gary Fields

Content Writer working alongside our expert accountants to bring you the latest Tax and Accounting news.

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