Are we headed for credit crunch part two
A report by the Confederation of British Industry (CBI) has highlighted the concerns of many UK companies regarding the availability of credit in the short to medium term. A number of UK companies fully expect UK banks to reduce the size of credit lines available and also tighten conditions attached to further funding. While this does potentially look like the credit crunch part two it is in fact highly likely to be a short-term situation.
The complete disappearance of credit lines after the credit crunch hit the US was possibly the most severe seen in living history and is unlikely to be repeated again for some time to come. However, that's not to say that UK banks will return to former lending levels and the fairly lax conditions which were often associated with them. The UK banking industry has had its fingers burned severely over the last 18 months and without government assistance and government funding many of the best-known UK banks would have disappeared by now.
However, even though conditions in the UK credit market are nowhere near as bad as they were 18 months ago, many UK companies are still struggling to survive. Even the slightest tightening of regulations and conditions attached to funding initiatives will have a significant impact upon failure levels in the UK economy. The government is doing all it can to increase the flow of liquidity within the UK banking sector but so far this has failed to have any real impact in the business arena.
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