The government has confirmed the long-awaited Project Merlin agreement resulting in the UK’s largest banks lending £76bn specifically to small firms – up £10bn from last year.
After months of negotiations chancellor George Osborne today announced the details of the agreement in the Commons.
Under Project Merlin lenders will provide an overall figure of £190bn to businesses this year, up from £179bn in 2010, under the watchful eye of the Bank of England.
In addition, the banks will provide £1bn of risk capital over three years for small businesses in parts of the UK worst hit by government cuts.
The banks have also agreed to cut bonuses and disclose the pay of a number of their senior executives.
The new measures are generally welcomed, but there still remain a number of fundamental issues in banking sector that haven’t been addressed.
Earlier this month ACCA senior policy adviser Emmanouil Schizas examined the prospects for Project Merlin, concluding that there was little hope for a credible SME loan deal.
About Robert Lovell
Business and finance journalist