Project Merlin Fails to Deliver Magic Recovery

The implementation of the Project Merlin programme has ground to a halt at least for now.  There have been ongoing discussions to produce a £200bn package that would aid small companies in turn stimulating business and creating a much needed upturn in the economy.  According to a BBC report dated 23 January, talks have stalled over governance issues.

The ‘carrot and stick’ approach

The banks have long been the subject of public criticism over the seemingly unreasonable bonuses paid out to their employees. Project Merlin was seen as a 'carrot and stick' approach to help ease the situation, due to the banks unwillingness to curb their bonuses.  The UK government has been willing to overlook their excesses provided that banks would lend a helping hand to small businesses. Now this is in jeopardy, although it is hoped that talks will continue and a compromise reached.

Stuck between a rock and a hard place

The government badly needs this deal to go through. So the coalition government is stuck between a rock and hard place as the UK economy (like many of its global partners) is in urgent need of stimulation and such a large loan to small business and entrepreneurs is a sure-fire way to aid such stimulation, without such enterprise, the economy will continue to languish. Consequently, it seems the coalition government needs to take a firm hand in trying to force through Project Merlin. It will look weak if it fails to deliver the much needed loans as it will be seen to be unable to control the bonus excesses of the large banks while delivering economic stimulus to the economy.  Public perception sees the world's economic ills laid bare at the feet of the banks; it is time for them to put something back into economy and help aid economic recovery.

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