MANUFACTURERS are finally detecting an easing in the availability of credit for the first time in more than a year.

A report by the manufacturing industry organisation, EEF, claims that the combined efforts of the Bank of England and the Government to unblock bank lending is beginning to take effect.

However, it warns that despite manufacturers reporting an easing in credit conditions, they caution that it is clearly too soon to say conditions are back to normal and that policymakers cannot afford to assume the issue closed.

EEF head of economic policy Lee Hopley said: “Firms have been struggling with credit constraints for the best part of two years, but efforts to restore some normality to financial markets were always going to take time.

“It now appears there is light at the end of the tunnel and conditions are now starting to improve. If this continues it will help allay fears that credit constraints would derail companies’ ability to take advantage of the recovery.

“That said, the Government and the Bank of England will need to move carefully.”

He added: “Even as we start to see clearer signs of an upturn companies, especially SMEs, (small and medium-sized enterprises) will remain vulnerable to higher costs or reductions in the availability of credit.”

EEF has been tracking credit conditions for manufacturers on a quarterly basis since the end of 2007.

For the first time, relatively fewer companies reported an increase in the cost of credit over the past two months.

Equally importantly, considerably fewer companies have seen a reduction in the availability of new and existing credit facilities, which implies lines of credit and finance are freeing up.