It appears, unsurprisingly, that Project Merlin - the commitment to credit availability agreed earlier in the year between the Treasury and the four largest banks (HSBC, Lloyds TSB, Barclays and RBS) - has failed to meet its unofficial quarterly target for lending to SMEs.

The pledge was to make £76bn available to SMEs in 2011, which equated to £19bn in the first quarter of the year, but the actual lending figures had fallen £2.2bn short.

As I pointed out in my blog of 11 February, Merlin was a fairly woolly document in the first place. Its targets were based on gross rather than net lending, and the commitment was only to make credit available on "commercial terms" with potentially prohibitive charges.

The British Bankers' Association has pointed to "muted demand" for funding - which may be a lack of confidence required for expansion, or could equally be a reluctance to accept unattractive lending terms.

It is difficult to see where this will go. Banks will continue to complain that the ability to loosen up credit terms is being restricted by the pressure to maintain capital adequacy. At the same time, there are no clear sanctions for failing to meet targets - Vince Cable, the Business Secretary, has merely talked about "examining options for further action".

As I said in February, levels of borrowing are unlikely to be in line with targets until confidence increases amongst banks and borrowers, and a set of hollow commitments was never likely to achieve this.