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Firms suggest credit crunch maybe becoming less severe

There are signs that the credit crunch may have become less severe for businesses, according to the latest CBI figures published at the weekend.

Firms were less negative in the March CBI Access to Finance Survey than they were in February about the availability of new and existing credit over the previous three months.

Sarah Green, Regional Director, CBI North East said: “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.

“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.”

Firms did say, however, that the cost of finance continued to rise and access to trade credit insurance has worsened over the past three months.

Nearly half of firms (46%) say they have cut staff numbers over the past three months as a result of the credit crunch, a slight increase on February’s figure (40%). Staff hours have stabilised, even though output is still coming down, and firms are cutting back on training budgets and capital investment.

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