View more on these topics

Major banks agree to increase SME lending by £10bn

Chancellor of the exchequer George Osborne has reached a deal with major banks to raise business lending by £10bn this year.

Osborne says Project Merlin, which involved discussions with Santander, HSBC, Royal Bank of Scotland and Lloyds Banking Group, will mean £76bn of small and medium sized enterprise lending.

That represents an increase from £66bn in 2010 and Osborne says this is higher than banks were planning on their own.

He also says it is anyone could who has been following discussions would have expected.

Osborne says “anger and retribution will not bring an iota of economic growth” and the country must “move from retribution to recovery”.

Total business lending will increase from £179bn in 2010 to £190bn in 2011.

The Bank of England will publish updates on the lending quotas and SME lending will be linked to chief executives’ pay.

Shadow chancellor Ed Balls says the outcome is pitiful and embarrassing for the government.

He says: “For a chancellor who talked so tough in opposition this is a pitiful outcome and embarrassing climbdown.

“A damp squib is something which has the potential to be explosive but gets wet and that is exactly what has happened with this chancellor.”

Yesterday Osborne revealed that the banking levy will increase from 0.05% to 0.075% on balance sheets.

This represents an increase from the original tax of £1.7bn to £2.5bn.

Recommended

melanie_bien.jpg

60 SECONDS WITH…MELANIE BIEN

Your appearance on BBC Breakfast last week caused quite a stir, were you surprised at the reaction? I was surprised about how it all blew up from what started as a very short exchange on Twitter. It suddenly became of interest to a lot of people. Has Kirstie Allsopp called to apologise?No. The timing of […]

MM alan mathewson

AFI reports improved customer satisfaction

Abbey for Intermediaries says it has reduced its average mortgage offer turnaround time to just nine days, down from 14 a year ago. The lender says in the past 10 months it has seen a 50% increase in satisfaction levels among intermediaries, based on a poll of 400 brokers. It attributes these improvements to new […]

Newsletter

News and expert analysis straight to your inbox

Sign up
Comments
  • Post a comment
  • Steve Pollard 9th February 2011 at 3:02 pm

    What are the details of this supposed “deal”?

    What are the banks getting in return for this “deal”?

    What will happen to banks who fail to meet these agreed lending quotas?

    What about a “deal” on residential lending with penalties imposed on banks who don’t meet agreed lending targets?

    Any anger and retribution is borne of out the complacency of banks, particularly those under govt ownership and the failure of subsequent govts to act.