Households and companies in Britain may find it harder to borrow in the coming months after market turmoil tightened credit conditions at the end of last year, a survey said today.
The survey from the Bank of England also showed mortgage defaults were likely to rise in the next three months and demand for secured credit was expected to fall.
Policymakers are concerned about the impact of the recent credit squeeze, and the findings are likely to bolster the case for further interest rate cuts to shore up the economy.
The bank's fourth-quarter survey was conducted between November 19th and December 12th so would have taken account the sharp rise in money market rates at the start of last month.
The survey showed lenders were concerned about the level of risk exposure and the outlook for the broader economy.