British firms reject external funding
London, June 10, 2013
British manufacturers are increasingly turning away from external funding to grow their businesses, a survey has found, despite tentative signs that the cost of credit is easing.
Nearly 52 per cent of companies polled by manufacturers' organisation EEF for its quarterly Credit Conditions Survey said they had no need to borrow to support their business, a record high.
Industry turning its back on sources of credit would be bad news for the government and the Bank of England, which are trying to get lending going with measures such as the Funding for Lending scheme that makes it cheaper for banks to lend to small businesses.
Some improvement of such lending may be starting to emerge in the second quarter, said EEF economist Andrew Johnson.
The survey, published yesterday, found the balance of companies who said the cost of credit was rising rather than falling sank to two per cent, the lowest since the survey began in 2007, although the improvement was largely concentrated among big businesses.
"The counterpoint to this cautious optimism, however, is that there is continued growth in the number of companies that appear to no longer see external finance as an important funding source to support their business," said Johnson.
"This is a result mirrored by other surveys and will surely slow investment," he added.-Reuters