Finance & Business World

U.K. manufacturers said credit constraints eased in the past two months as the cost of financing their debt stabilized further, according to the Engineering Employers Federation.

The proportion of British companies reporting an increase in the cost of new borrowing dropped to 40 percent from 47 percent in the previous quarter, the EEF said in a report today. The lobby group based its findings on a survey of 328 companies taken between Jan. 28 and Feb. 17.

“Evidence that credit constraints have started to calm down will help build some confidence across the sector,” Lee Hopley, chief economist at the EEF, said in an e-mailed statement. “The key question is whether the banks will be there for manufacturers as a return to growth generates greater demand for finance.”

The EEF forecast last year that the economy, which expanded 0.1 percent in the fourth quarter, will grow 0.9 percent in 2010. Prime Minister Gordon Brown is counting on the credit squeeze to ease further, aiding the recovery in time for an election which he must call by June.

Source