Access to finance remains a serious problem for businesses, but the rate of deterioration in credit conditions slowed further over the past three months, the CBI said.
Responding to the CBI's latest Access to Finance Survey, businesses were less negative than they were in March about the supply of new and existing credit. Asked about the availability of new credit lines over the past three months, a net 20% reported that the situation had deteriorated. While this indicates that supply remains tight, conditions have eased since March (-36%) and January (-62%). For existing credit lines, the balance was -10%, compared with -16% in March.
The easing of conditions for new credit supply is expected to continue. Only a net 7% of firms see a further fall in new credit supply over the next three months. Meanwhile, no further worsening is anticipated for existing credit supply. Around 10% of firms expect the situation to improve, and another 10% expect it to deteriorate, giving a balance of zero per cent, which indicates that conditions for existing credit will be stabilising.
Ian McCafferty, CBI chief economic adviser, said: "Credit availability is still a concern, but the severity of the situation is easing compared with a few months ago. Big companies who were encountering serious problems getting credit at the start of the year are still finding it difficult, but they expect that the supply of existing credit will get slightly easier over the next few months."
However, while the tightening of credit supply in bank loans and overdrafts has moderated over the past three months, trade credit insurance remains a significant problem. A balance of 54% of firms reported its availability had worsened in the three months to May, although this was not as severe as in the March survey (-72%).
