Vince Cable threatens banks with tax increases

19 May 2011

The UK's business secretary has threatened the nation's banks that they may face increased taxes if they fail to increase their lending to businesses.

Vince Cable noted the ability of lenders to stick to the guidelines of Project Merlin - which aims to see a total of £190 billion ($307 billion) offered to firms - has been far from encouraging so far.

He explained this was particularly true with regard to lending to small and medium-sized enterprises, which are supposed to be offered £76 billion.

His comments come as analysts predict that institutions could fall short of the scheme's targets.

"It's a deal with the banks. If the banks don't deliver, there are options open to the Government, including taxation," Mr Cable explained.

Hector Sants, chief executive of the Financial Services Authority, had earlier called for more intensive and intrusive supervision of banks in the UK to be brought into play.

By Gary Cooper

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