Member Article

Credit crunch 'set to worsen' - CBI

Without intervention from the Government the effects of the economic downturn on UK companies will get even worse over the next three months, according to new CBI research.

It found that 63% of firms who sought new finance said its availability had worsened in the last three months. More worryingly, a similar proportion (59%) says it will deteriorate even further over the next three months.

The figures are from the first monthly CBI Access to Finance Survey, introduced to try to show the impact the credit crunch is having. For example, nearly two in five (37%) firms say they have cut staff numbers over the past three months because of credit-related issues. This rises to almost half when it comes to large firms, 40% of which have also cut back on production.

Sarah Green, Regional Director for CBI North East, said: “We have urged the government to move as quickly as possible to set out when the various support packages to tackle the credit crunch will come into effect, and to implement them quickly. Day by day, constrained credit is damaging our economy. A lack of clarity creates a ‘fear the worst’ mentality and could be costing people their jobs.”

The CBI is calling on the government to put forward a clear timetable showing when different measures aimed at repairing credit flows will come into effect. They feel this would increase business and consumer confidence and help companies plan for the future.

Sarah Green said: “This survey brings into sharp focus the effect of the credit crunch across the whole of business. “The largest firms are suffering most, they’re finding it harder and more expensive to get credit. Almost half of large businesses have cut jobs, and two-fifths have cut production.

“The lack of available trade credit insurance is also a real problem for firms that rely on it, and large businesses have been particularly hit.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .