James Moore: Smoke and mirrors, but no magical ending

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The Independent Online

Outlook: So the banks met their lending targets under the grandiosely named Project Merlin. Cue much self-congratulation from the industry and a bevy of bonuses all around. Except for Stephen Hester at Royal Bank of Scotland.

Strangely enough, though, there hasn't been a lot of cheering from the business lobby. Perhaps that's because after taking loan repayments into account, there was actually a contraction in net lending in every quarter of 2011; the first time this has happened since 2009, when the economy was still shuddering from the aftershocks created by the financial crisis.

There are fears that the UK has tipped back into recession, and any hopes of getting it out again are being strangled by businesses being unable to access credit on affordable terms.

Terry Pratchett, the author of humorous fantasy books, once created a wizard called Rincewind who was distinguished by his singular inability to do magic. It seems that this much-hailed agreement between the Chancellor and the banks to "make money available" for lending would have been better named after him than Merlin, for all the good it has done.

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