Fewer companies experiencing rising borrowing costs

THE number of manufacturers faced with rising funding costs has fallen to the lowest level since 2007, according to a new survey.

EEF, the manufacturers’ organisation, said credit easing programmes such as the recently launched Funding for Lending scheme, which aims to lower the cost of credit for small and medium-sized firms, may be helping.

It is encouraged that the balance of companies seeing an increase in the cost of credit has fallen to 11.2% from 21.2% in the previous quarter, although its chief economist, Lee Hopley, said it was too early to draw definitive conclusions.

She added: “It is a welcome sign that the stubbornly high number of companies seeing the overall cost of finance increase has fallen to the lowest level since the financial crisis.

“However, there are still more companies saying the cost of finance is going up rather than down.

“With the short-term demand outlook looking very challenging, we simply cannot afford to have factors that are at least partly in the UK’s control holding back desperately needed investment.”

The EEF stressed that there were signs that some firms, particularly SMEs, are opting out of accessing external finance altogether, with half of all sizes of firms now reporting hey did not need to borrow.