Retailers are optimistic of being thrown a lifeline in this month’s Budget as speculation mounts that action on the issue of credit insurance could form part of Chancellor Alistair Darling’s plans.

Sources close to the situation said the Government will reveal plans on how to tackle credit insurance in April 22’s Budget.

The industry has lobbied the Government since the start of the year for action on the issue. The practice of credit insurance has gained prominence as suppliers to some retailers such as Topps Tiles, Focus and DSGi have had their insurance cut in the wake of the tough climate.

Business Retail Consortium director of business and environment Jane Milne said: “Government has hinted an announcement is on its way. It should be helping retailers through the recession, rather than allowing short-term cash flow difficulties to push them over the edge.”

One of the proposals the Government is considering is guaranteeing medium-risk companies whose cover has been cut but not withdrawn.

Focus chief executive Bill Grimsey met with a senior member of Business Secretary Peter Mandelson’s office last week to push for urgent action on credit insurance. Grimsey, who was accompanied by Focus suppliers Forest Fencing and Harris Brushes, said he was given a “sympathetic hearing”.

He has called for an independent inquiry to examine the behaviour of credit insurers. He said: “I was listened to attentively and they are considering action in the area.”

A spokesperson for the Treasury said they were unable to talk about any potential issues that might come up in the Budget.