The number of UK manufacturers seeing a rise in the cost of credit has fallen to its lowest level since 2007, according to new research by the EEF, the manufacturers’ organisation.

Key findings of the EEF’s study included a lower

 balance of firms reporting a rise in the cost of new borrowing and improved responses on fees and rates on existing borrowing.

The EEF also found that respondents to its survey reported the availability of credit remained “broadly stable”.

However the organisation said more firms were opting out of external finance altogether and were seeking internal finance for investment, including holding onto cash to support working capital requirements.

Lee Hopley, the EEF’s chief economist, said it was a welcome sign that the “stubbornly high number of companies seeing the overall cost of finance increase has fallen to the lowest level since the financial crisis.

“While it is still too early to draw definitive conclusions, the fact this has coincided with the latest round of credit easing via the Funding for Lending Scheme offers hope that some impact is being achieved,” she added.

However Hopley warned that there was still more companies’ saying the cost of finance was rising rather than decreasing.

The EEF survey shows the balance of companies seeing an increase in the cost of credit has fallen to11.2% from 21.2% in the second quarter of 2012.