Grave business - my financial world

U.K. companies’ credit supply deteriorated at a slower pace in the past three months and lending conditions may start to stabilize, the Confederation of British Industry said.

A net 20 percent of respondents said access to credit worsened in the three months through May, compared with a net 36 percent in the period through March, Britain’s biggest business lobby said in an e-mailed statement today. The survey of 75 companies was conducted from May 13 to May 22.

Bank of England Deputy Governor Charles Bean said last month that the supply of credit in the U.K. may stay “impaired” for a while. The government has pledged hundreds of billions pounds in loan guarantees to get banks to resume lending and help revive the economy, which shrank 1.9 percent in the first quarter, the most since 1979.

“Credit availability is still a concern, but the severity of the situation is easing compared with a few months ago,” Ian McCafferty, chief economic adviser at the CBI, said in the statement cash advances. “Big companies who were encountering serious problems getting credit at the start of the year are still finding it difficult.”

For loan supply on existing credit lines in the next three months, 10 percent of respondents said it will deteriorate and 10 percent anticipated improvement, giving a net balance of 0. That indicates stabilization, the CBI said. A net 7 percent of respondents said that supply of new credit will worsen.

Access to trade credit insurance is still a “significant problem,” the CBI said. A net 54 percent of firms said its availability worsened in the period, compared with 72 percent in the quarter through March.

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