High street banks are set to hit their targets for lending to businesses, they said today.

Five British banks are signed up to a Government-backed plan to increase lending and revive the economy.

The so-called Project Merlin deal agreed in February with Chancellor George Osborne included Barclays, HSBC, Lloyds Banking Group, RBS and Santander pledging to lend at least £190bn, including £76bn for small and medium-sized firms (SMEs) this year.

According to provisional figures released today, the five banks delivered £100.4bn in gross new lending to UK businesses during the first six months of the year, including £37.4bn to SMEs.

A spokesman for the five banks said: "The Merlin banks are on track to meet their business lending commitments.

"The first half year performance demonstrates the banks’ commitment to providing businesses with the financial support they need to invest and grow and the significant progress made this year.

"The banks’ efforts to encourage customers to come forward with borrowing proposals are set against the overall economic environment which remains challenging and business demand for credit which remains weak."

A Treasury spokesman said: "Today’s provisional results are a big improvement, with lending to small businesses up by 20% for quarter two compared to quarter one.

"This is broadly in line with what is needed to meet the Merlin targets which is good news for British businesses."

Shadow Treasury minister Chris Leslie condemned today’s announcement, saying: "It’s increasingly clear the Project Merlin deal was little more than smoke and mirrors.

"The banks have run rings around George Osborne, who ended up announcing what most people now recognise was a weak and toothless deal which has done little to improve things for small businesses."