Richard Lambert, the CBI director-general, this morning called for urgent action to inject confidence into the UK economy. In a letter to the prime minister Gordon Brown, he said: "The biggest threat hanging over businesses is cash-flow. If they cannot get their hands on the cash and credit they need to go about their day-to-day business, there is a real risk we could see healthy firms going under."
The key elements of the CBI’s plan are: special steps by the Bank of England to improve liquidity; safeguarding of trade credit insurance cover; tax cuts and a freeze on business rates; acceleration of public spending plans.
Our reaction: the credit squeeze is still the major stumbling block for businesses. The banks may say that they’re still lending but, in practice, many industry sectors are still verboten for lenders (ie, retail, property etc). This is having a knock-on effect for any businesses exposed to consumer spending and the property sector (ie, everyone). One piece of encouraging news this weekend was RBS’s decision to freeze overdraft charges to business customers. But our question: why limit the move to customers with turnover below £1m” What about the rest of us”
You can read the CBI’s full plan here.
