Publishing the survey, EEF, the manufacturers’ organisation highlighted the importance of the Bank of England continuing with its quantitative easing programme to prevent higher borrowing costs from weakening a potential economic recovery.
According to the survey 45 % of firms reported a significant or moderate increase in the cost of finance in the past two months, up from just over 37% in the first quarter. Over the same period, the proportion of firms reporting a reduction in the availability of new lines of borrowing fell from 49% to 42% but only just over 4% of companies had seen an improvement. In addition more companies (39%) reported an increase in the fees on existing borrowing - up from 34% in the first quarter and 27% at the end of last year.
Commenting on the results Steve Radley, EEF Chief Economist, said
"Despite interest rates falling to a historically low level and the efforts to free credit markets so far, manufacturers are seeing few benefits. It is important that the Bank continues with its quantitative easing programme to prevent higher borrowing costs weakening the recovery we hope to see later in the year. "
In addition, the survey also showed that companies also continue to face problems obtaining credit insurance. Almost 70% of companies had seen access to credit insurance either withdrawn or reduced in the last two months.
Steve Radley added:
"Our survey that credit insurance is a major issue for many manufacturers. The government will need to keep a very close eye on whether its top -up scheme is working and take action if the number of firms reporting problems does not go down."
ENDS
The survey was conducted between April 29 and May 20 with 618 companies responding.