Manufacturers seeing bank credit ease says EEF

1 min read

UK manufacturers have seen an improvement in credit conditions in the second half of 2012 with both availability and cost of new lending improving for the second quarter running according to an EEF survey.

The number of companies reporting increased availability of new lines of borrowing moved back into positive territory over the past two months, the EEF found. The number of companies reporting increased costs of new borrowing also edged down, though remained positive. The overall cost of credit was, however, still rising for a balance of companies as a result of the cost of credit on existing arrangements and fees. A new question in the survey shows that demand for external finance is set to increase next year. Over a fifth expect their financing needs to grow to support investment plans while less than 5% expect their demand to reduce relative to 2012. EEF chief economist Lee Hopley said the modest improvement in lending was encouraging. "We are yet to see the details of the new Business Bank but, what it must do, is start to provide a long term solution to the underlying problem of a lack of competition in SME banking," she added.