Economists: Merlin data is worthless
ECONOMISTS have dismissed the government’s Project Merlin figures as bearing no relation at all to the availability of credit in the economy.
The government struck a deal with banks last year under which they agreed to boost lending in return for less anti-bank rhetoric from ministers.
The Bank of England released figures yesterday showing that banks had met the overall target to increase gross lending but fallen slightly short on the small business lending target.
The Merlin data says that the UK’s five biggest banks made £214.9bn of credit facilities available to businesses, £74.9bn of which was to small firms, versus targets of £190bn and £76bn respectively.
The response from City economists was to shrug, however. They say the figures are meaningless when assessing the health of the economy.
Henderson’s Simon Ward said net lending data is more useful: “I haven’t given the [Merlin] figures much of a look. You want to concentrate on the amount of money actually lent from the point of view of the impact on the economy.”
Instead, Merlin targets gross lending – the credit banks have “made available” to firms – but uses a less stringent definition of the term than that used by the Bank of England itself, which says the Merlin data “are not collected under the Bank of England’s statistical code of practice”.
Citigroup economist Michael Saunders said: “The figures bear no relation to the cost and availability of credit to the UK corporate sector… I think the Bank of England is embarrassed at having to publish them.”
The Bank highlights its official data alongside the Merlin figures. Due to a change in statistical method, the gross lending data is not comparable throughout 2011, but the net figure shows a steady contraction in borrowing. Overall, firms borrowed £6.6bn less in 2011 than they repaid in loans.
But financial secretary Mark Hoban called the Merlin figures “good news”.