Merlin: hero or evil-doer?
How does Project Merlin relate to its namesake?
Illustrations from the Nuremberg Chronicle, by Hartmann Schedel (1440-1514) via Wikipedia
The name 'Merlin' derives from the Welsh 'Myrddin', just in case you wondered. I am pretty sure that most of you will be familiar with the name for one of two reasons
1. He was King Arthur’s greatest and most well known advisor and resident magician;
2. The name given to the agreement between the current UK government and the four major high street banks in the UK (Barclays, Lloyds Banking Group, RBS and HSBC) - the agreement being one that covers a number of items including banks bonuses, executive pay and lending, and - most importantly - lending to small businesses.
It’s fair to say that we have been quite critical of Project Merlin and more specifically the amount of lending being given to small businesses. After all, it is the private sector and the growth of new and existing businesses that is supposed to be pulling our economy out of this quagmire of an economic crisis.
Now the reason we have been quite critical is because it has been failing to deliver what it promised and the banks are consistently failing to hit the planned lending targets. In the first half of this year the banks were supposed to lend £38bn, but they only achieved £37.3bn. Now you could say that they did quite well and they almost hit target, but the reality is that the target was heavily negotiated down before the agreement kicked in. It’s going to take all of the money they were targeted to lend, plus lots more, to get the growth we need which in turn should create more jobs.
Let’s face it, no one in their right mind is going to borrow money if the deal isn't attractive and makes no financial sense. Even with the Bank of England base rate still at an all time low of 0.5%, the costs of commercial lending are still high.
It is was with great excitement that I read recently that RBS is actually going to put some effort in in order to do its fair share. It is only reasonable that it does what is needed, after all, we the UK tax payer does own 83%. So what exactly is the Royal Bank of Scotland, which includes Natwest and Coutts, going to do? Three things:
1. Upfront fees are to be waived (which are around the 1.5% mark).
2. Early repayment charges are being dropped.
3. Low fixed rate of interest being offered.
Some might say that this isn’t enough and it is a little bit whiffy, thus the only reason RBS is doing it is because it is massively behind the lending target and it is trying to show effort before it gets a right royal telling off. But at this stage of the game I am inclined to give RBS the benefit of the doubt and a pat on the back for taking some positive action.
In many Arthurian legends Merlin ends up being lured by the devil or some other form of wickedness and ends up turning to the dark side undoing all of the good work he had been striving to achieve. Let’s hope our modern age Merlin doesn't go the same evil way and become nothing but a pertinent reminder of the failings of our banks, our government and our economy.
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