Businesses 'trying to avoid borrowing from banks'

The uncertain economic climate is not only having an impact on the borrowing habits of the Aussie on the street, but companies across the country also appear to have adopted a more cautious outlook.

According to a business banking survey released by National Australia Bank earlier this week, 70 per cent of firms are keen not to take on any extra debt.

Many economists had hoped that interest rate reductions sanctioned by the Reserve Bank of Australia (RBA) in November and December would encourage enterprises to expand and spend more money.

However, this doesn't appear to have been the case and further rate adjustments that had been predicted for the start of 2012 have not been forthcoming.

Speaking to the Herald Sun, CommSec chief economist Craig James said that firms were "holding fire", as they wait to see what happens in the troubled eurozone.

Last month, opposition treasury spokesman Joe Hockley told Talkback Radio that the RBA needed to trim interest rates in order to stimulate economic growth and all eyes will be on the next board meeting in March.

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