Government Fails To Reach Agreement On Business Lending Targets

Tue, 25 Jan 2011

Business lending negotiations between the coalition government and Britain’s major banks are set to continue after attempts to reach an agreement on the amount they lend to small businesses stalled.

The plan, codenamed Project Merlin, was expected to have resulted in an announcement of around £200bn in business loans being made available by banks this year.

However, talks are said to have stalled over the level of lending being sought by ministers. The banks want a lower figure than the £200 billion being demanded by the government.

On Monday a Treasury official admitted the Government was "between a rock and a hard place", but they claimed a deal could still be agreed within the next two weeks.

Ed Balls, the new shadow chancellor, said: "At this critical time for our economy and for the prospects of a strong recovery, the banks should be playing their part in supporting small and medium-sized businesses ."

He added: "What people want to see with the banks is some action. The Government should get on with forcing banks to reveal who gets million pound bonuses and should stop their plan to give the banks a tax cut this year."
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