LONDON- ONLY one in 10 manufacturers across the UK, euro zone, and emerging markets said that credit conditions deteriorated in January to the extent that it was constraining their business, a survey showed on Monday.

The results from a survey of nearly 3,000 manufacturers suggested that it is a collapse in world demand, not the financial crisis itself, that is now taking its toll on factories worldwide.

Separate surveys have showed factories faced terrible business conditions in January leading many to cut production and lay off workers.

But the survey which covered businesses across Europe, the UK, and various large emerging market countries, showed that only one in three companies in January reported a deterioration in credit availability in the past three months.

But surprisingly few - just one in 10 - said that was what hurt their business.

'While it is worrying to see credit availability deteriorating at around one in every three manufacturers, it is encouraging to see so few companies reporting that a lack of credit is actually constraining their business,' said Chris Williamson, chief economist at Markit.

The European Central Bank has made considerable efforts to improve the flow of credit, including cutting interest rates from 4.25 per cent down to a current 2.0 per cent, with more cuts expected to come.

The survey showed conditions contrasted significantly from country to country.

The survey showed the UK faced worse credit conditions than the euro zone, with 39 per cent of companies seeing a deterioration in credit availability and 14 per cent saying it was constraining their businesses.

In the euro zone, just under a third said that conditions were worse than in the previous three months.

In Spain, where 46 per cent of manufacturers said credit conditions had worsened, just over a fifth said a lack of access to credit was constraining the running of their business.

Only four per cent of German manufacturers, which have been among the hardest hit in the developed world, said credit conditions were so dire that they were hurting their business.

Terms on credit conditions also tightened for manufacturers, with a striking 72 per cent of Spanish firms saying terms worsened, while those in the UK reported tighter constraints than those in the euro zone.

That chimed with the ECB's latest bank lending survey which showed credit standards toughened at the end of last year, and are expected to tighten further into 2009. -- THOMSON REUTERS