Manufacturing outlook 'improving slightly'

Manufacturers are finding it easier to get credit but still do not believe conditions are back to normal, according to a new report.

A survey of over 400 firms by the Engineering Employers Federation (EEF) found an easing in credit conditions for the first time in a year, although a third said the cost of finance from banks and other finance providers had increased in recent months.

The business group said the industry was finally beginning to see some relief from the combined efforts of the Bank of England and the government to unblock bank lending.

Lee Hopley, the EEF's head of economic policy, said: "Firms have been struggling with credit constraints for the best part of two years but efforts to restore some normality to financial markets were always going to take time.

"It now appears there is light at the end of the tunnel and conditions are now starting to improve. If this continues it will help allay fears that credit constraints would derail companies' ability to take advantage of the recovery.

"That said, the Government and the Bank of England will need to move carefully. Even as we start to see clearer signs of an upturn companies, especially small and medium sized enterprises, will remain vulnerable to higher costs or reductions in the availability of credit."

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