The UK government needs to do more to encourage lending by the country banks and should extend the trade credit insurance scheme announced last month, retailers have urged.

The British Retail Consortium said today (31 July) that a fall in lending had led retailers to cut staff and reduce stock levels.

Some 44% of small- and medium-sized retailers told the BRC that the cost of lending had risen over the last three months, despite cuts to bank rate.

The retail association called on the Government to back-date the trade credit insurance scheme to 1 April last year. When the initiative was brought in last month, it was back-dated to the start of October.

BRC business environment director Jane Milne said: "As the Government launches its employment schemes, it's outrageous that some retailers are being forced to let staff go because of a lack of affordable credit.

"The poor availability of bank credit is undermining stock levels and retail employment. We understand the banks' current cautious approach to lending, but there's no reason why they need to stop loans to fundamentally sound businesses."