Ahead of the Budget, the British Retail Consortium asks that the Government provide top-up insurance cover to help retailers survive difficult trading conditions.
Half of large retailers and over 40% of small and medium-sized businesses (SMEs) have said that the reduction or withdrawal of trade credit insurance has undermined their ability to trade.

The findings are part of the BRC's Credit Conditions Survey, published today. It also revealed that 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.

Trade credit insurance protects suppliers who sell goods on credit to companies against the risk they will not get paid. If credit insurance is withdrawn, suppliers demand to be paid upfront, which can leave retailers short of stock, create cash flow problems for retailers and cost jobs as retailers seek to divert funds from wages to paying suppliers. Banks also use retailers' insurability as one of the criteria for making lending decisions.

The BRC survey reveals 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.

Ahead of the next week's Budget, the BRC is calling on the Government to provide top-up insurance cover up to the level that private insurers are prepared to provide.

The BRC's director general, Stephen Robertson 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.

He added: "We're not asking for handouts but, for those retailers that need it, a safety net which underpins trade credit arrangements is essential."