Credit is still not flowing around the economy and if the issue is not tackled then the recession will run deeper, it has been claimed.
Small business insurance customers could be interested to learn the Confederation of British Industry (CBI) has maintained that healthy companies will struggle to survive unless the government takes urgent action.
It is urging the government, the Bank of England and the Financial Services Authority to make sure banks are not forced to deleverage too quickly as this would suck the finance out of the economy too fast and cripple firms that are otherwise healthy.
Richard Lambert, director-general of the CBI, claimed the root of the problem still needs addressing.
"Credit flows, on which companies depend for day-to-day business, remain severely constrained. Until this underlying issue - getting credit flowing around our economy again – is resolved, economic activity cannot begin to recover," he added.
Meanwhile, the Forum of Private Business recently claimed that companies have been hit by declining market conditions and increased costs during the economic downturn.
