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Will the banks EVER lend again?

The Griggs' report unveiled last week revealed a depressing snapshot of the shabby treatment by banks towards SMEs seeking credit.

Over a 12 month period, of nearly 2,200 refused applications appealed by small firms, Professor Griggs said almost 40% of those should have been reconsidered by the banks.

Imagine that is a genuine reflection of all lending decisions made with respect to small firms in 2011/12, but who didn't appeal. That's a lot of firms needlessly hung out to dry.

Last night the Chancellor, George Osborne, and BoE boss Mervyn King, announced a new credit easing scheme to get the banks lending, the so called 'funding for lending' – or soon to be known as the FFL project.

Haven't we been here before?

This follows a number of other 'lending' schemes which have all, generally, failed to do what they said on the tin.

What we've seen instead is borrowing costs rising, while lending has continued to fall.

On the face of it then, the new FFL scheme is good news for those small businesses struggling to make ends meet. But only if the banks embrace FFL as an enabler to boost lending, which in turn will help recharge the UK economy and get it growing out of recession.

The sorry facts are though that the banks have consistently failed to lend fairly since the crisis began, despite a number of state initiatives. The Griggs' report most recently has highlighted this only too well.

Yet here we have another credit easing scheme, albeit on a much grander scale, to get the banks splashing the cash. Will this one work?

Maybe, probably not if the banks' past form is anything to go on.

And no matter what lending schemes are put in place, nothing will imbue confidence here more than the eurozone sorting itself out. That remains the chief issue facing the UK economy at the minute, and no number of lending initiatives here can solve that.

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