Treasury considers adjustment to lending targets

The revelation that 2009 saw the first drop ever in banking to business lending has created something of a quandary for the UK government and in particular the Treasury. It is well-known that the Royal Bank of Scotland and Lloyds Bank were issued with legally binding lending targets as part of the taxpayer funded bailout which occurred last year. However, these targets will be missed even though there is some time to go before the March deadline date. So what next?

Royal Bank of Scotland committed itself to lending £16 billion to businesses and Lloyds committed itself to a further £11 billion. While ultimately these agreements are "legally binding" it is unlikely that the government will dish out any fines or retribution because this would be counter-productive and potentially weaken both the financial strength and the operating strength of the companies.

It is more likely that the target figure of £27 billion, by March this year, will be downgraded with possibly a longer term goal introduced to ensure that the government is still committed to increasing lending in the UK as soon as possible. Taxpayers are becoming more and more aggrieved at the very fact that they have funded various bailouts and cash injections into the market at a time when banks are unwilling or unable to increase their lending, placing more pressure upon taxpayers across the UK.