BOSSES today urged the Government to tackle the “credit crunch” – or see more firms go to the wall.
A survey by employers’ group the CBI showed that 63% of firms found finance harder to get than they did three months ago.
More worryingly, 59% believed the situation would worsen even further over the next three months.
The CBI survey showed that 37% of firms had cut staff numbers during the past three months because of credit-related issues. Among larger firms the figure rose to 40%.
Richard Lambert, CBI director-general, said: “We have urged the Government to move as quickly as possible to set out when the various support packages to tackle the credit crunch will come into effect and to implement them quickly.
“Day by day, constrained credit is damaging our economy.
“A lack of clarity creates a ‘fear the worst’ mentality and could be costing people their jobs.”
The CBI is calling on the Government to put forward a clear timetable showing when different measures aimed at repairing credit flows will come into effect.
Mr Lambert said this would increase business and consumer confidence.
Firms would then be able to plan for the future instead of simply cutting activity because they feared the worst and were not clear when the situation may improve.
The survey shows the very largest firms – those employing more than 5,000 staff – had been hit hardest hit by the credit crunch.
Of the companies who sought new credit, 82% of the very largest sized firms reported access has deteriorated in the past three months while 57% of large firms and 65% of small and medium-sized firms said the same.
Looking to the next three months, 65% of the very largest firms said access to new credit will get worse, compared with 56% of large firms and 58% of small and medium-sized companies.
In the next 12 months alone, the CBI estimates that larger firms will need to re-finance more than £100bn of credit facilities in the UK.
Richard Lambert said: "This survey brings into sharp focus the effect of the credit crunch across the whole of business.
“The largest firms are suffering most, they’re finding it harder and more expensive to get credit. Almost half of large businesses have cut jobs, and two-fifths have cut production.”