Half of big retailers’ cover hit

Half of large retailers and more than 40% of small and medium-sized ones (SMEs) say the reduction or withdrawal of trade credit insurance has undermined their ability to trade, the British Retail Consortium (BRC) has warned.

The BRC's Credit Conditions Survey found:

• Nine out of ten SME respondents and two-thirds of larger retailers believe that trade credit insurers are not in a position to assess accurately the risk of a supplier not getting paid
• A third of SME retailers had experienced a contraction in lending by their bank. Of those, 89% said it had affected their businesses, 75% had cut stocks and 30% had cut employment

The BRC is calling on the Government’s budget next week to provide top-up insurance cover up to the level that private insurers are prepared to provide.

Stephen Robertson, British Retail Consortium director general, said: "For retailers to survive and keep people in work they need to keep shelves stocked with the goods customers want. In these uncertain times, it's even more important suppliers have the confidence that trade credit insurance brings. Cover must remain available.

"We're not expecting the tax payer to take on more risk than private insurers. But, by matching the trade credit insurance that private insurers are willing to provide, the government can help fundamentally sound businesses weather the recession at relatively little cost. Without this backing, the lack of trade credit insurance will threaten the viability of more suppliers and retailers.

"UK retailing employs more people than the whole of manufacturing and is every bit as deserving of support. We're not asking for handouts but, for those retailers that need it, a safety net which underpins trade credit arrangements is essential."