Lending pressures easing, says EEF
MANUFACTURERS are starting to see credit conditions easing, according to research by industry group EEF.
A recent survey of more than 200 smaller manufacturers reveals that the availability and cost of new lending has improved for a second successive quarter.
The balance of companies reporting increased availability of new lines of borrowing moved back into positive territory over the past two months from -1%, to +4%. New lending availability was also positive for a balance of the smallest companies in the sample (less than 100 employees).
In addition, the balance of companies reporting increased costs of new borrowing also edged down, though remained positive at +5%. 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 for a balance of companies in the next year.
More than 20% expect their financing needs to grow to support investment plans whilst less than 5% expect their demand to reduce relative to 2012.
David Ost, North West director at EEF, said: “We’ve seen a few quarters of modest improvement in lending which is encouraging. With companies, on balance, expecting their demand for external finance to increase next year, progress on increasing the flow of credit and getting the cost down has to be sustained and built upon going forward.
“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.”
