Changes in access to and cost of finance for UK's manufacturers, past 2 months
Source: EEF Credit Conditions Survey, Q1 2009
For more than a year EEF has been tracking what’s been happening to the cost and availability of credit for manufacturers. Our latest survey, of nearly 700 companies, shows little movement on either front.
Despite the seemingly unceasing activity to support the banking sector and the official Bank rate at an historically low level, 37% of companies reported an increase in the cost of finance in the past two months, virtually unchanged from the situation in November. Similarly problems with access to finance remain as parent companies tighten the purse strings and new lines of borrowing continue to dry up.
The clocking is ticking – loan guarantee schemes have been announced, but some are not yet up and running. We now need to see the details of the recent measures to support bank lending agreed swiftly and communicated clearly to businesses.
Just as worrying, however, is the ongoing and significant decline in the availability of credit insurance. Our survey showed that two thirds of manufacturers had seen credit insurance reduced or withdrawn in recent months, putting real pressure on supply chains. While we've heard that some form of intervention from government to underwrite credit insurance has not been ruled out – as we blogged earlier this week – ruling it in can’t be delayed much longer.