London, 03 June 2008 Nearly two thirds of UK companies believe the worst impact of the credit crisis is yet to come.

• The UK’s reliance on property and the financial services industry for GDP growth, as well the US being a key export partner, has increased the impact of the global credit crisis.
• 95 percent of UK businesses believe there will be a slowdown in the national or global economies or both.

Nearly half of UK companies (46 percent) have already been affected by the credit crisis, but 62 percent believe that they will be more greatly impacted in the future according to a survey sponsored by Atradius, the leading UK trade credit insurer.

The 14 country survey questioned over 2500 businesses in North America, Europe and Australia, on various aspects of the credit crunch. Fears that the worst is yet to come are supported by the finding that UK companies have the highest expectations of an economic slowdown, with 95 percent believing there will be a slowdown in the national and / or global economies - more than every other country surveyed.

To add to the bleak outlook, over half (53 percent) of UK companies have experienced tightening in the availability of financing and one third believe this is likely to restrict growth.  In this new economic environment, 73 percent of UK companies believe an increase in payment defaults by customers will have the most significant impact on them while the ability to increase sales, extend credit to customers, raise outside capital and an increase in the cost of capital remain significant concerns. 

Shaun Purrington, Atradius, Regional Director, Commercial - UK & Ireland, commented:

“The UK has been reliant on the financial and property sectors for much of its growth, which have been particularly badly affected by the credit crunch. As these industries slow, we would need a significant pickup in other sectors to bolster the economy and the belief that this will not happen is fuelling the UK business community’s pessimistic outlook.

“Atradius started seeing the ripple effects of the credit crisis on global economies in the fourth quarter of 2007. Since then, suppliers have been extending credit terms in an effort to maintain sales momentum. However, recently we have seen an increase in claims for bad debt and as the level of unpaid invoices grow, businesses are likely to become far more restrictive in the terms they offer.

“The credit crisis is affecting growth and profitability of companies across a range of industries globally. Rising costs of capital, more stringent financing requirements and increased customer payment defaults can be catastrophic for businesses and awareness of the potential risks is essential to maintaining a healthy balance sheet as we operate in this higher risk environment.”

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About the survey

A net number of 2502 interviews were conducted exclusively for this topic. The survey population consisted of business professionals that sell products and services on credit or rely on the credit markets to create liquidity for their companies to grow. Those surveyed were spread across Belgium, Denmark, France, Germany, Italy, The Netherlands, Spain, Sweden, Switzerland, the United Kingdom, Australia and New Zealand, Mexico and the US.

The survey was implemented by Heliview.

About Atradius

The Atradius Group provides trade credit insurance, surety and collections services worldwide, and has a presence in 40 countries. Its products and services aim to reduce its customers’ exposure to buyers who fail to pay for the products and services customers purchase. With total revenues of approximately EUR 1.8 billion and a 31 percent share of the global trade credit insurance market, its products contribute to the growth of companies throughout the world by protecting them from payment risks associated with selling products and services on credit. With 160 offices, it has access to credit information on 52 million companies worldwide and makes more than 22,000 trade credit limit decisions daily.

Further information: 
Polhill Communications

Jenette Greenwood / Nicola Pierce

Tel.:020 76550530

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