Credit seizure hits big firms

The credit crisis appears to be - after a lengthy gestation - hitting larger firms. Latest data from the Bank of England indicates that more bigger companies are struggling to pay down debt. Default rates for medium-to-large companies have risen, for the first time since the tail-end of 2009. And conditions look set to worsen further as debt gets pricier, fuelled by eurozone anxiety.

Pressure building

"Although lenders expected a small increase in overall credit availability in the coming three months," the Bank of England warned, "factors such as the economic outlook and tighter wholesale funding conditions were expected to impact negatively on credit availability."

It added: "Lenders commented that developments in the euro area and their impact on banks' funding conditions would be a key determinant of credit availability over the coming quarter." That last clause looks ominous. Any positive news? Defaults on household secured loans have slipped fallen but expectations - should conditions deteriorate - that the situation could reserve have simultaneously risen.

Services to the rescue?

Meanwhile new data has emerged on the impact of the UK's over-weening services sector in the last quarter - which appears to have helped pull the UK economy away from the jaws of a contraction. Just. Service sector activity expanded at its fastest clip since the summer, industry data showed on Thursday.

Market research group Markit said its Markit/CIPS Services Purchasing Managers Index climbed 1.9 points to 54.0 in December compared to 52.1 points in the previous month. But bear in mind that recent data from the Office for National Statistics claimed services output dropped 0.7% month-on-month in October. So some catch-up is probably going on here, artificially pushing up the numbers.

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