Credit crunch eases for British businesses - CBI

Britain's recession-hit businesses are finding it easier to obtain credit but face higher costs of financing, according to a survey published on Monday by the Confederation of British Industry.

"The improvement in access to new credit will help many businesses struggling with the recession, and it is encouraging that its supply is expected to improve in the months ahead," CBI head Richard Lambert said.

"It is still unclear when bank lending will flow freely again, but for many firms credit conditions are at last moving in the right direction."

The business lobby group, which polled 73 firms in July, found that 27 percent believed that credit availability had improved in the last three months, while 10 percent said it had worsened.

But credit became more expensive, with half the firms reporting an increase in prices, and more than one-fifth saying the cost of raising finance increased by more than 100 basis points.

The largest businesses, with more than 5,000 staff each, saw a strong rise in credit availability over the past three months after a difficult start to the year.

The CBI represents around 240,000 British businesses, whose employees comprise about one- third of the country's private sector workers. LONDON, AFP