Lending conditions getting worse says EEF

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Britain's manufacturers are seeing lending conditions worsen with availability of finance declining and the cost of credit rising according to a major survey published by the manufacturers' organisation EEF.

The EEF's latest Credit Conditions Survey for the fourth quarter comes as economic uncertainty is growing and represents a turnaround from previous quarters, where availability of finance in particular had improved and increases in the cost of credit had begun to stabilise. Following several tough years, particularly for small companies, securing finance on the right terms a further deterioration in the lending environment will act as another barrier to increasing investment, says EEF. The organisation's chief economist Lee Hopley, said there had been some progress in increasing the supply of finance to manufacturers in the recent past, but there were signs that this has gone into reverse. She went on: "Economic headwinds have picked up and there are growing signs of caution around short-term growth prospects. This is precisely the time where we need to see more, not less, investment if we are to create the investment and jobs our economy urgently needs. The survey comes on the back of last week's SME Finance Monitor published by the BDRC Continental, financed by the major UK banks, which showed that manufacturers were more likely to have new/renewed loan requests declined. In addition, 37% of new/renewed loan requests by manufacturing companies required security compared with 25% for the overall sample.