The Bank of England has confirmed that UK banks failed to meet their lending targets to small and medium-sized firms in 2011, as set out under the much-maligned Project Merlin agreement.
Barclays, RBS, Lloyds, HSBC and Santander had agreed to lend a combined £76 billion to SMEs, but fell short by £1.1 billion to confirm the challenges faced by smaller firms in accessing the credit that's so vital to their consolidation and growth.
The news was compounded by the fact the gross lending target of £190 billion was far exceeded – by £24.9 billion – as the banks remained more willing to lend to larger firms.
It is now hoped that the government's credit easing proposals will have the desired effect to increase the flow of credit to SMEs, which have largely struggled to overcome a range of cash flow pressures through the prolonged economic downturn.