U.K. CBI Survey Foreshadows Improving Credit Conditions

U.K. firms expect laxer credit conditions in the next three months, according to a CBI survey released overnight. The poll shows a net balance of 7% of firms expecting tougher credit conditions in the upcoming three months, compared to the previous three month. This is sharply lower than the net balance of 36% seen in the previous quarterly survey. Conditions for existing credit lines were expected to remain unchanged, the most positive result since the CBI started the survey in January. However, higher borrowing costs by 1 percentage point or more for new or renewed credit lines in the three months to May were reported by 27% of firms, down from 33% in the March survey. Just 10% reported reduced borrowing costs for the same period, highlighting that credit conditions are still difficult despite a record low repo rate of 0.5% and massive quantitative easing by the BoE.