Following today's announcement from the British Bankers' Association that it has met its lending targets under the Merlin scheme, EEF and the Labour Party have expressed scepticism.
The British Banker’s Association (BBA) said that the UK’s top five banks – RBS, Lloyds, HSBC, Barclays and Santander UK – have met the set targets. The group lent over £100bn to British businesses during the first six months of 2011. The BBA also said that SMEs had received £37.4bn of the total amount lent.
As part of the Project Merlin deal, banks are committed to meet government-set targets on lending to businesses.
The BBA has consistently been under pressure from the Government to meet the targets, agreed as part of the deal expected to boost growth.
The Bank of England said in May that the banks had fallen short of targets set in the Merlin deal for Q1 of the first year, although the Treasury said on Friday that lending had increased in Q2.
A Treasury spokesperson commented on the improvement: “Today’s results are a big improvement, with lending to small businesses up by 20 percent for quarter two compared to quarter one.”
But the Shadow Treasury Minister Chris Lesley said the lending targets themselves were inadequate: “The weak and toothless small business lending targets have so far been missed.”
While EEF praised the banks, Ms Lee Hopley, chief economist at EEF, questioned the ostensible success of the banks meeting their targets: “Smaller firms are still seeing rising costs and some of them are discouraged from even approaching their Banks. We need to see these trends reversed.”