A recent report has shown that the global credit squeeze that has had a hold on the UK since last summer could still get worse, which could spell increased misery for households. Lenders have said that both consumers and businesses could suffer, and that they are bracing themselves for an increase in the level of defaults, coupled with a continuing slow down in the economy. The data comes from a report from the Bank of England.

The survey said: “Lenders reported that their expectations for the housing market, the changing economic outlook and changes in their appetite for risk had contributed to the decline in credit availability.” It added: “Lenders expected these factors to contribute to the tightening in credit availability over the next three months.”

One economist said: “An end to the credit crunch does not seem to be in sight if the Bank’s second quarter credit conditions survey is anything to go by. Overall, further evidence that the economy is heading for a nasty downturn.”

Recent figures have shown that there has been an increase in the level of defaults relating to secured lending, and whilst secured lending defaults rose in the second quarter many industry officials are expecting them to keep on rising, as household continue to struggle with the global credit crunch and its effects, which is impacting on the ability of many to keep up with repayments on their bills and debts. The results of the survey are also causing concern with regards to whether there will be a further drop in interest rates, which many think will not happen.

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