THE big five banks are failing to meet UK Government lending targets to Scottish businesses, Finance Secretary John Swinney has said.

He claimed Small and Medium Enterprises (SMEs) were not receiving their fair share under the Project Merlin agreement between Westminster and Barclays, HSBC, Lloyds Banking Group, RBS and Santander UK, receiving only 4.8% of lending despite accounting for 6.4% of businesses in the sector.

Mr Swinney said the shortfall "constrained economic activity and threatened this important component of our economy".

He added: "If only 4.8% of gross lending went to Scottish SMEs, it is clear that Project Merlin has failed to address poor lending conditions for Scottish companies and this needs to be addressed by the UK Government. He called for immediate action to allow viable firms to grow and support jobs.

Mr Swinney wrote to Chief Secretary to the Treasury, Danny Alexander, saying he had noted reports that Project Merlin targets would not be extended and would be replaced by a £20 billion credit-easing programme to facilitate cheaper loans to SMEs and that further details would be revealed in next month's Budget. He added: "I will await further details before commenting on this new proposal but simply make the point we are now nearly four years into this crisis and the UK Government is still unable to address this important issue."

Mr Swinney said rejection rates for export firms seeking loans were running at twice the national average, that ongoing uncertainty meant many companies were putting off investment and that SMEs continued to struggle to secure finance even when keen to invest.

It was "particularly disappointing" to note that the banks had failed to meet the targets but the Scottish Government would continue to do what it could "to unlock new private investment", he said.

Meanwhile, First Minister Alex Salmond called for increased capital spending and more funds for small and medium-sized businesses in the UK Budget after being accused of putting too much focus on the referendum and allowing Scotland's unemployment figures to spiral out of control.

Labour leader Johann Lamont said he was "paying lip service to Scotland's unemployment crisis". At First Minister's Questions, Ms Lamont asked why one in three of all jobs lost in the UK in the last three months were Scottish jobs.