Healthy companies will struggle to survive unless the Government takes urgent action to deal with the intensifying credit crunch, the Confederation of British Industry (CBI) has warned.
The trade body argues that, unless credit begins to flow again, the Government's other initiatives will be "ineffective and expensive failures".
In a letter to member companies, Richard Lambert, director general of the CBI, set out a number of initiatives he argues the Government must urgently adopt including measures being used by the US government to lend money to firms in the short-term, and by the French government to make trade credit insurance available.
"We still need to address the root of the problem," Lambert says. "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. Otherwise healthy companies will face increasing difficulties, and some will struggle to survive.
"Where necessary, Government itself should provide interim credit, capital and liquidity directly to offset the shortage in the private sector."Mortgage Solutions
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