~BUSINESS BULLETIN~
News... T
PROJECTMERLIN BANKS MISS SME LENDING TARGETS
he five major banks have lent £37.3 billion to small and medium- sized enterprises (SMEs) – less
than the £38 billion half-year target agreed with the government under Project Merlin. The amount lent to SMEs in the second
quarter was £20.5 billion, up from £16.8 billion in the first quarter, according to the Bank of England. HSBC, Barclays, Royal Bank of Scotland, Lloyds Banking Group and Santander UK promised the government that a total of £76 billion of credit should be made available to SMEs this year – up from £10 billion in the previous year.
CAUSE FOR CONCERN Brendan Flattery, CEO of business software company Sage UK & Ireland, says, ‘From
the very beginning, our monthly Omnibus survey of small business owners showed distinct scepticism about Project Merlin, with almost half expecting it to have little or no impact on bank lending. ‘We are yet to see any real evidence that might alleviate these concerns.’
‘If a business opportunity
doesn’t tick all the boxes then banks don’t want to lend’
Jeremy Waud, managing director of facilities
management company Incentive FM, says that the agreement between the government and the banks is ‘a lot of hot air’. He argues, ‘The banks certainly aren’t
promoting the fact that they have money that they want to lend if the business case is good. ‘In my experience, if a business opportunity
doesn’t tick all the boxes then they don’t want to lend. When they do want to lend, they only want to do it on terms that suit them.’
BANK BASHING However, Peter Ewen, managing director of Venture Finance, believes that to ‘lay all the blame at the feet of banks is over- simplifying things’. He adds, ‘The business finance landscape is fundamentally changed, and companies need to have a better understanding of their other options for funding growth and how to cope with life beyond the quick-fix credit of the past.’ n
next decade but believe the overall business landscape will improve. Half of the 664 business leaders surveyed
B 8 BUSINESS XL
by Barclays Corporate for its ‘Business in 2021’ research think that Britain will be a better place to do business, while 29 per cent expect conditions to deteriorate. Kevin Wall, managing director of Barclays
Corporate, says the fact that the majority of companies believe in ‘the fundamental strength’ of the UK as a place in which to conduct business ‘underlines the temporary nature of the challenges we are currently experiencing’.
usinesses expect to see increasing foreign ownership of UK companies and assets over the
UK FOREIGN OWNERSHIP TO INCREASE BY 2021 ‘It is also telling to see that businesses are
generally more positive about their region than the UK as a whole, showing the importance of regional development,’ he adds. On average, 5 per cent more companies are confident
‘Businesses are generally more
positive about their region than the UK as a whole’
about their future regional business landscape. The survey indicates that foreign investors
are likely to benefit from any economic growth in the next ten years, with 79 per cent of respondents predicting foreign ownership in the UK to increase.
WARNING SIGN Wall warns, ‘While we can expect more international investment in the UK to stimulate economic development and job creation, there also needs to be consideration given to the fact that decision-making, research and development, and tax generation may be located elsewhere.’ The survey follows the acquisition of
Mike Lynch’s technology company Autonomy by US-based Hewlett-Packard last month in a deal worth $10.2 billion. The takeover has prompted concerns that it would mirror Kraft Foods’s purchase of Cadbury, which has been heavily criticised for resulting in massive job losses at the UK sites. n
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