Curtails to credit loosening

Posted on 6 Apr 2009 by The Manufacturer

Access to credit looks to be easing for manufacturers, according to the latest survey by the Confederation of British Industry (CBI) for March.

The data reveals that a balance of -36% of firms said access to new credit had tightened in the last three months, compared with -59% in February.
For existing credit, the balance was -16% compared with -25%.

The situation remains tough for the very largest businesses though – 86% of firms with over 5,000 employees that had sought new finance in the last three months said they’d had difficulties.

“Fewer firms said in March that the availability of credit had got worse for them in the past three months than did so in February or January. The view that the pace of deterioration is easing correlates with what businesses are starting to tell us on the ground,” said Ian McCafferty, chief economic adviser at the CBI.

“Firms are not saying that credit conditions are getting better, but the severity of the disruption is no longer worsening as sharply as it was three months ago. And the combination of easier monetary policy and the government’s measures to support the banking sector may be starting to have an impact.”

Spoiling the party somewhat though is the news that access to credit insurance remains tight. In the past three months it was harder to gain cover for the supply of goods for 72% of the respondents to the survey who said they use the service. And more firms now say they have cut jobs because of the credit crunch; 46% confirming this measure had been taken compared with 40% in February.