Experts suggested that many corporate borrowers, including small and medium businesses, had continued to find “credit conditions highly restrictive,” despite reports that credit conditions for businesses had improved in the latter part of 2009.
Paddy Earnshaw, CRM director at Travelex, said, “Despite the fact that billions have been injected into the financial system through the Bank’s quantitative easing programme, this is still being used to build up balance sheets and asset prices.
“Relatively little credit has filtered through to the UK’s businesses, particularly SMEs, who are struggling to stay afloat and borrowing remains both restricted and problematic.”
The Roundtable also suggested that businesses who need to increase stocks to sustain their recovery would find it “difficult to raise the necessary finance”, given the tight credit controls.
They expressed concern that credit conditions had affected growth in the UK’s export trade, and had counteracted the potentially positive effects of a weak pound. They also suggested the UK’s competitiveness in the international markets had not increased as much as it should have done.
The Roundtable also commented that prospects for the UK Labour market were “highly uncertain,” with most expecting businesses would “choose to work their employees more intensively, rather than recruiting new staff.”
However, despite the Roundtable’s cautious outlook, a recent run of positive data has boosted investors’ hopes the Bank of England would bring its quantitative easing programme to an end in February.