Banks costing us engineering exports

Export demand is 48% stronger, but growth is being restricted by lack of access to finance, say members of The Engineering Industries Association (EIA)

A new survey shows that confidence is growing in Britain’s core engineering companies. But it’s no thanks to the banks, whose attitude to lending is still restricting growth and hindering export opportunities. Overall, the feeling is that the Government has not made any impact with its requirement for banks to lend to SMEs.

The body representing small and medium-sized companies in engineering, The Engineering Industries Association (EIA), says that a third of its members are more confident than they were six months ago. Three-quarters of them say that growth rates are higher or at least the same as last year.

Export demand is 48% stronger, but growth is being restricted by lack of access to finance, say members. Indeed, overall, there was a high level of dissatisfaction with the banks who appear to be keeping a tight hold on their money despite trying to appear to do the opposite.

Members needing access to additional overdraft facilities to enable export growth are instead seeing their overdrafts reduced. At the same time, companies that do not need finance are seeing their overdraft facilities increased as banks seek to give the impression that lending to business is increasing.

Summing up, EIA President Sir Ronald Halstead said, “Banks are inhibiting the growth of SMEs. They are slowing the supply chain in the UK. They are inhibiting export opportunities that would do much to establish British manufacturing abroad, improve our balance of payments and increase employment in the UK. The present devaluation of sterling against the Euro and US dollar provides a tremendous opportunity for UK industry which could be lost.”