Over the next three months the expectation is that credit conditions will show little change.

Transcription

1 Access to finance survey may Executive summary CREDIT CONDITIONS STARTING TO STABILISE Over the past three months the rate of deterioration in the availability of both existing and new credit lines has continued to moderate. Looking ahead to the next three months, firms expect little change in credit conditions. Trade credit insurance is still a cause for concern. Financial conditions are exerting a slightly weaker impact on business activities. Respondents report that the rate of deterioration in the availability of both exisiting and new credit over the last three months has continued to slow. Over the next three months the expectation is that credit conditions will show little change. The proportion of firms reporting an increase in the direct cost of finance has fallen since the last survey. The most frequently cited responses to the survey's question on indirect finance costs continued to be arrangement fees and the speed and administrative burden of accessing new credit. The availability of trade credit insurance continues to be a source of concern for respondents. Current financing conditions continue to impact on business activities but there are tentative signs that the impact is weakening.

2 access to finance survey - may CBI Access to Finance Survey May Detailed results *where appropriate figures have been recalculated to exclude not applicables Finance availability Respondents reported that the availability of both existing and new credit deteriorated further in the three months to May however the rate of decline continues to moderate. Over the next three months firms foresee little change in the availability of both existing and new credit lines. There has been a notable easing in the availability of finance for factoring and invoice discounting, and for overdrafts. Direct finance cost In the three months to May, fewer respondents reported a rise in the cost of finance compared to the previous survey. There was a notable fall in the proportion of respodents reporting a rise of more than 100 basis points for existing and new credit lines. There has been little change in how the cost of finance is calculated. Indirect finance costs In accordance with previous surveys, respondents indicated that arrangement fees and the speed and administrative burden of accessing new finance were the most common ways that the cost and the availability of finance have changed over the last three months. There was a notable increase in the proportion of respondents reporting a rise in the lump sum fee charged on undrawn facilities over the last three months. Trade credit insurance The availability of trade credit insurance has been an ongoing concern for business since the start of the credit crunch. Over the three months to May its availability has continued to decline but at a slower pace than in the previous survey. Once again, a decline in the credit limit being insured and a fall in the number of customers covered by insurance continue to be the main ways that the availability of trade credit insurance has changed in the past three months. Impact on business In the three months to May, financial conditions continued to have an impact on business activities. However respondents indicated that across most aspects of business activities, there was a moderation in the impact from financing conditions. Capital investment continues to be the business activity most strongly impacted. Staff numbers continue to be cut back but at a moderating rate. Output and investment in training continue to deteriorate but the decline in the three months to May has slowed. 2

3 economic & business outlook November uk results 2003 Company Size Breakdown SME's (0-249 employees) SMEs report that the availability of credit over the past three months, while continuing to deteriorate, is doing so at a slower pace, particularly in regard to new finance. This suggests that the measures to encourage lending to such firms are taking hold, reinforcing the findings of the March survey. Expectations for the next three months show a further levelling off in the rate of deterioration for existing finance. In regard to new credit lines, respondents see no further decline in its availability. The availability of trade credit insurance continued to worsen for SMEs in the three months to May. However such firms report that there has been an easing in the deterioration of the credit limit being insured, the cost of insurance, and the number of customers covered. SMEs report that the negative impact on output, capital investment, and mergers and acquisitions, from current financing conditions, eased significantly in the three months to May. Large firms ( employees) Large firms report a moderate deterioration in the availability of new finance over the last three months, but little change in the rate of decline in the availability of existing finance, relative to the last two surveys. However looking to the next three months, large firms expect the availability of existing credit to ease further, while the deterioration in the availability of new credit is expected to remain similar to the past three months. Large firms report that the decline in the availability of overdrafts and invoice/payment terms is moderating. Current financing conditions continue to impact on the business activities of large firms, however there are signs that the impact weakened in the three months to May. Large firms report a moderation in the rate that staff numbers are being reduced and capital investment cut back. The impact on output has eased markedly since the last survey. Very large firms (5000+ employees) Very large firms expect a modest improvement in the availability of existing credit lines over the next three months and a further easing in the rate of deterioration for new credit. Such firms report no further decline in the availability of existing credit in the three months to May. The largest firms indicate that the deterioration in the availability of bank loans and overdrafts has eased signifantly compared to previous surveys. Among the largest firms, financial conditions continue to impact negatively on most business activities. However, the rate that staff numbers, capital investment and investment in training are being cut moderated since the last survey. 3

4 access to finance survey - may CBI Access to Finance Survey May Key Charts Q1- Availability - past three months (new credit lines) Q4 - Cost of finance past three months (new credit lines) % balance 20 January February March May % 40 January February March May SMEs Large Very Large Overall 5 0 than Up 51- Up 1-50bp No change Down 1-50bp Down 51- Down more than The rate of deterioration in the availability of new credit eased further for firms as a whole. Q5 - Impact of finance availability % balance Jan Feb March May Working Capital Capital Investment M&A Fewer firms reported an increase in the costs of new credit than in the previous survey. Q6 - Availability for different methods of financing % balance January February March May Bank loans Overdrafts Corporatepaper Invoice/payment terms Factoring& invoice discounting Different business uses have all seen a moderation in the tightening of finance in this latest survey. Q11 - Changes to trade credit insurance There was a notable easing in the tightening of finance for overdrafts, and for factoring and invoice discounting. Q12 - Changes in activity attributed to financing conditions % balance 10 January February March May % balance 0 January February March May Costof insurance Creditlimitbeing insured No.of customers covered Speed and administrative burden -70 Staff numbers Staff pay Staff hours worked Output Capital Investment Mergers & investment in training acquisitions Firms report a slower rate of deterioration in the cost of trade credit insurance and the credit limit being insured. The negative impact from financial conditions has weakened since recent surveys for many areas of business activity. 4

5 overall results CBI Access to Finance Survey May Overall Results time series *for some questions where balances could not be calculated, figures are simple percentages. These also exclude'don't know's' and 'N/A's'. Availability of finance 1 Change in availability over the past three months Expected change in availability over the next three months Impact of availability of finance on: Working capital Finance for capital investment Finance for acquisition/merger Change in availability for: Bank loans Overdrafts Ability to place corporate paper Invoice/payment terms Factoring & invoice discounting Direct finance costs 3 How the cost of finance is calculated* Jan Feb Mar May Change in cost of finance over past three months* than Up 51- Up 1-50bp No change Down 1-50bp Down 51- than Jan Feb Mar May than Up 51- Up 1-50bp No change Down 1-50bp Down 51- than Jan Feb Mar May

6 cbi access to finance survey - may CBI Access to Finance Survey May Overall Results time series *for some questions where balances could not be calculated, figures are simple percentages. These also exclude'don't know's' and 'N/A's'. Indirect finance costs 7 Changes in the cost/availability of finance of: Arrangement fees Cost of finance Loan terms e.g. covenants Required security renewing/accessing new finance Change to lump sum fee on 'undrawn facility' over past three months * Up less than Down less Down 0.5%- Up 0.5%-1% No change than 1% 0.5% than 0.5% 1% than 1% Jan Feb Mar May Change to basis point spread on 'undrawn facility' over past three months* Down 51- Up 51- Up 1-50bp No change Down 1-50bp than than Jan Feb Mar May Trade credit insurance 10 Change in availability over past three months How the availability of trade credit insurance has changed: Cost of insurance Credit limit being insured No. of customers covered by insurance renewing insurance Impact on business 12 Changes to business activity over past three months directly attributed to current financing conditions Staff numbers Staff pay Staff hours worked Output Capital investment Investment in training Mergers & acquisitions

7 SME results CBI Access to Finance Survey May SME Results (0-249 employees) time series *for some questions where balances could not be calculated, figures are simple percentages. These also exclude'don't know's' and 'N/A's'. Availability of finance 1 Change in availability over the past three months Expected change in availability over the next three months Impact of availability of finance on: Working capital Finance for capital investment Finance for acquisition/merger Change in availability for: Bank loans Overdrafts Ability to place corporate paper ~ -17 Invoice/payment terms Factoring & invoice discounting Direct finance costs 3 How the cost of finance is calculated* Jan Feb Mar May Change in cost of finance over past three months* than Up 51- Up 1-50bp No change Down 1-50bp Down 51- than Jan Feb Mar May than Up 51- Up 1-50bp No change Down 1-50bp Down 51- than Jan Feb Mar May

8 cbi access to finance survey - may CBI Access to Finance Survey May SME Results (0-249 employees) time series *for some questions where balances could not be calculated, figures are simple percentages. These also exclude'don't know's' and 'N/A's'. Indirect finance costs 7 Changes in the cost/availability of finance of: Arrangement fees Cost of finance Loan terms e.g. covenants Required security renewing/accessing new finance Change to lump sum fee on 'undrawn facility' over past three months * Up less than Down less Down 0.5%- Up 0.5%-1% No change than 1% 0.5% than 0.5% 1% than 1% Jan Feb Mar May Change to basis point spread on 'undrawn facility' over past three months* than Up 51- Up 1-50bp No change Down 1-50bp Down 51- than Jan Feb Mar May Trade credit insurance 10 Change in availability over past three months How the availability of trade credit insurance has changed: Cost of insurance Credit limit being insured No. of customers covered by insurance renewing insurance Impact on business 12 Changes to business activity over past three months directly attributed to current financing conditions Staff numbers Staff pay Staff hours worked Output Capital investment Investment in training Mergers & acquisitions

9 large company results CBI Access to Finance Survey May Large Company Results ( employees) time series *for some questions where balances could not be calculated, figures are simple percentages. These also exclude 'don't know's' and 'N/A's'. Availability of finance 1 Change in availability over the past three months Expected change in availability over the next three months Impact of availability of finance on: Working capital Finance for capital investment Finance for acquisition/merger Change in availability for: Bank loans Overdrafts Ability to place corporate paper ~ -17 Invoice/payment terms Factoring & invoice discounting ~ -7 Direct finance costs 3 How the cost of finance is calculated* Jan Feb Mar May Change in cost of finance over past three months* than Up 51- Up 1-50bp No change Down 1-50bp Down 51- than Jan Feb Mar May than Up 51- Up 1-50bp No change Down 1-50bp Down 51- than Jan Feb Mar May

10 cbi access to finance survey - may CBI Access to Finance Survey May Large Company Results ( employees) time series *for some questions where balances could not be calculated, figures are simple percentages. These also exclude 'don't know's' and 'N/A's'. Indirect finance costs 7 Changes in the cost/availability of finance of: Arrangement fees Cost of finance Loan terms e.g. covenants Required security renewing/accessing new finance Change to lump sum fee on 'undrawn facility' over past three months * Up less than Down less Down 0.5%- Up 0.5%-1% No change than 1% 0.5% than 0.5% 1% than 1% Jan Feb Mar May Change to basis point spread on 'undrawn facility' over past three months* than Up 51- Up 1-50bp No change Down 1-50bp Down 51- than Jan Feb Mar May Trade credit insurance 10 Change in availability over past three months How the availability of trade credit insurance has changed: Cost of insurance Credit limit being insured No. of customers covered by insurance renewing insurance Impact on business 12 Changes to business activity over past three months directly attributed to current financing conditions Staff numbers Staff pay Staff hours worked Output Capital investment Investment in training Mergers & acquisitions

11 very large company results CBI Access to Finance Survey May Very Large Company Results (5000+ employees) time series *for some questions where balances could not be calculated, figures are simple percentages. These also exclude 'don't know's' and 'N/A's'. Availability of finance 1 Change in availability over the past three months Expected change in availability over the next three months Impact of availability of finance on: Working capital Finance for capital investment Finance for acquisition/merger ~ Change in availability for: Bank loans Overdrafts Ability to place corporate paper ~ 13 Invoice/payment terms Factoring & invoice discounting ~ -17 Direct finance costs 3 How the cost of finance is calculated* Jan Feb Mar May Change in cost of finance over past three months* than Up 51- Up 1-50bp No change Down 1-50bp Down 51- than Jan Feb Mar May than Up 51- Up 1-50bp No change Down 1-50bp Down 51- than Jan Feb Mar May

12 cbi access to finance survey - may CBI Access to Finance Survey May Very Large Company Results (5000+ employees) time series *for some questions where balances could not be calculated, figures are simple percentages. These also exclude 'don't know's' and 'N/A's'. Indirect finance costs 7 Changes in the cost/availability of finance of: Arrangement fees Cost of finance Loan terms e.g. covenants Required security renewing/accessing new finance Change to lump sum fee on 'undrawn facility' over past three months * Up less than Down less Down 0.5%- Up 0.5%-1% No change than 1% 0.5% than 0.5% 1% than 1% Jan Feb Mar May Change to basis point spread on 'undrawn facility' over past three months* than Up 51- Up 1-50bp No change Down 1-50bp Down 51- than Jan Feb Mar May Trade credit insurance 10 Change in availability over past three months ~ How the availability of trade credit insurance has changed: Cost of insurance -63 ~ Credit limit being insured No. of customers covered by insurance -25 ~ renewing insurance -63 ~ Impact on business 12 Changes to business activity over past three months directly attributed to current financing conditions Staff numbers Staff pay Staff hours worked Output Capital investment Investment in training Mergers & acquisitions