Firms withstanding credit crunch - commercial mortgages

09 October 2007

UK firms with commercial mortgages are becoming increasingly confident in their own levels of business activity despite the ongoing credit crunch, Lloyds TSB has said.

The firm''s business barometer has revealed that 70 per cent of firms expect their business activity to increase over the course of the next year – a rise of 11 percent on the August survey.

With profitability already reaching record levels in the second quarter of the year, Lloyds TSB has said that it expects profits will continue to grow over the rest of 2007.

"UK firms are clearly concerned about the possible wider implications of the credit market turmoil, such bullish results suggest there is no evidence of any impact on their day to day business activities," commented Lloyds TSB Corporate Markets chief economist Trevor Williams.

"In fact, business confidence has increased in each of the last three months, at a time when the inter-bank liquidity squeeze and fears over the US sub-prime crisis spreading to the global economy have been most intense," Mr Williams added.

Mr Williams also noted that the Federal Reserve''s interest rate cut had had a positive effect on confidence, with a rumoured cut by the Bank of England for November likely to have a similar effect.