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Bank loan target considered a red herring

The day after Chancellor Alistair Darling delivered the final Budget before the election, TMA (UK) has warned that nothing he said will address the liquidity problems facing Britain’s struggling businesses.

Director Tyrone Courtman has described the £94bn target for new loans from part-nationalised banks Lloyds Banking Group and RBS as a red herring which is unlikely to make it easier for firms to get their hands on cash.

The new target is gross, and replaces a net lending target (which was not met), permitting banks to meet their target without necessarily increasing provision of credit.

Courtman has warned that many businesses will continue to go the wall, but did express some sympathy for the dilemma banks face, with calls both for a conservative and cautious approach and, simulatenously, demands that they lend more money.

However, Courtman did welcome the cut in business rates for half a million small businesses, due to kick in during October.

The Budget has received a mixed response elsewhere, with Lloyds Banking Group and Brewin Dolphin both welcoming the increase in ISA limits, but with attacks from the ABI and Brewin Dolphin for the lack of other measures to encourage saving.

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