Bank credit: one of many current issues for businesses

It was leaked today that Project Merlin, the plan to make £200bn of loans available to businesses, has been stalled. The banks’ key issue is surrounding governance issues i.e. lending targets which include those businesses that are perceived to be weaker would not be in the interest of their shareholders. They have also argued that policies created by the Independent Commission on Banking would lead to a restriction in lending to both consumers and firms.

This comes at a time when the outgoing CBI chief, Sir Richard Lambert, has outwardly criticised the current government as "politics appear to have trumped economics on too many occasions over the past eight months". At a time when the topic of bankers’ bonuses has stoked public frustration one would have expected tax-payer funded banks such as RBS would want to be seen to be helping the recovery.

Business creation, investment and exports will be the keys to driving the necessary economic growth as simply making cuts fails to see the long term goals. As has been discussed on this site before (http://www.wessociety.com/Post.aspx?pid=66&uid=400) the localism agenda could potentially be worthwhile but has destroyed any confidence in the business infrastructure whilst creating a new system on an ad hoc basis. This coupled with politically driven issues that Sir Richard has cited such as the immigration cap, the carbon tax and the abolition of a default retirement age have all contributed to the anti-business feeling despite the rhetoric of the coalition.

It is widely thought that uncertainty is an economic actor’s worst nightmare. Will the lending provision increase and if so, at what cost? Perhaps the big bonuses will be the trade to increase the loan facility. Furthermore, the move from the Regional Development Agencies to Local Enterprise Partnerships is at best confused and at worst a shambles.

Business and entrepreneurship needs support. It needs the necessary funding to start and the required provision of credit to be sustainable. It can drive both the local and national economy forwards as well as implement the key individual, social and community benefits which are lacking.

Without this provision it will not matter what the business infrastructure is; only large, multinational companies will survive and the country will become further dependent on the South East.

Doesn’t strike me as being a ‘localism’ agenda, at all.