Treasury to scrap Project Merlin lending targets
The UK government will not extend a deal with banks requiring them to meet fixed lending targets to businesses, scrapping the ‘Project Merlin’ scheme designed to assist the economic recovery.
Since the financial crisis of 2007, many smaller firms not able to raise funds on capital markets have found it difficult to borrow to finance investment.
The government struck a deal with Britain’s major banks last year to boost lending to businesses, but data indicated today that institutions had failed to provide enough credit to small companies.
The Bank of England will publish the final Project Merlin lending figures on Monday.
While lenders are broadly on track to meet their overall target of £190bn, lending to small firms may fall slightly short of the £76bn target.
Figures published so far by four of the five banks show credit facilities to SME’s in 2011 came in at £63bn, suggesting the final outcome will be lower than expected.