Pictured: Chris Key

The continuing recovery of the West Midlands' automotive sector is being hampered by company bosses being reluctant to approach banks for finance and evidence that Project Merlin - the government's funding initiative - is failing to deliver, according to one of the region's leading corporate financiers.

Chris Key, corporate finance partner at the Birmingham office of Haines Watts which acts for many SMEs and owner managed businesses, said that many company directors felt trapped.

"We are witnessing the continuing growth of our automotive sector, particularly in the West Midlands following  JLR's announcements  of expansion,  but this is dependent on the supply chain which includes a significant number of West Midlands companies that are struggling to finance their growth," said Mr Key

"At the same time Project Merlin - the agreement between the government, Barclays, Lloyds Banking Group, Royal Bank of Scotland and HSBC - that aims to revitalise the UK economy, has still to perform."

Statistics from the Bank of England have revealed that between quarter two and quarter three of 2011, lending to small firms fell from £20.5bn to £18bn. Figures from the Office for National Statistics have also shown there was a steep fall in the number of businesses which had received loans - 65% compared with 90% in 2007. 

"This is ultimately the most serious issue facing UK Plc and it is hitting the West Midlands hard. We would like to see the government doing more to ensure lending to business and help businesses defer the impact of having to fund their tax payments

"Project Merlin, based here in Birmingham, also has to do more and be seen to be leading the way. At the same time, we need a change of culture and attitude that actively goes out to support business particularly those that are vital to the growth sectors in this region," said Mr Key.

For more information on Haines Watts, please visit their website here: www.hwca.com