Richard Lambert, CBI Director-General, has commented on the Bank of Englands latest Credit Conditions Survey and the need for measures to restore credit flows across the economy, including the car industry.
His comments follow calls by the CBI for measures from the government to tackle the shortage of trade credit as a matter of urgency.
Mr Lambert said: The Bank of England's latest Credit Conditions Survey paints a bleak picture of the impact of the credit crunch on businesses and families. The availability and the cost of credit have both deteriorated in the final quarter of 2008, and are expected to get worse in the next three months.
The Government is going to have to do more to restore credit flows across the economy. Nowhere is this more urgent than in the UK's highly efficient automotive industry, which is now suffering serious collateral damage from the banking crisis. This is not a call for a blanket bail-out for the industry. But without access to credit or loan guarantees on commercial terms, this vital part of the economy will incur lasting damage.
Moreover, the shortage of trade finance is affecting output across a broad swath of industry, and has led a number of firms to extend their period of shutdown over the Christmas/New Year season. Inventories are being cut back, and the Bank of England's survey indicates a marked cutback in capital spending programmes over the past three months.