The global credit crunch is something that most of us are sick of hearing about, most probably because the term sends shivers down the spines of anyone that doesn’t want to see the housing market or the economy go down the pan! The credit crunch has resulted in chaos on the financial markets, and the credit squeeze that has affected consumers and businesses alike has created all sorts of problems.

According to one recent report the credit squeeze in the UK is set to get even worse over the coming months, and with talk about an imminent recession coupled with a slump in the housing market this does not come as welcome news. Households and businesses are set to face even tougher times and increased misery as the squeeze continues to take its toll, and many industry officials feel that these predictions will increase concerns in relation to the state of the nation’s economy.

The findings came from a survey that was carried out by the Bank of England earlier this month. It is thought that the intensification of the credit squeeze could have a profoundly damaging effect on the confidence levels of consumes and businesses alike.

The quarterly credit survey from the central bank read: “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 went on to state: “Lenders expected these factors to contribute to the tightening in credit availability over the next three months.”

According to the survey the second quarter of this year saw default levels rise to far higher than lenders had expected, and now lenders are bracing themselves for the situation to get even worse, as soaring inflation, rocketing petrol and food costs, and increased bills all take their toll on borrowers’ ability to make repayments. Corporate as well as private loan defaults are expected to continue rising.

One industry official said that the survey results did not make for pleasant reading, stating: “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 reports have already shown that orders in the service and manufacturing sectors of business have been falling, and even the government is warning consumers to brace themselves for difficult times.

The new deputy governor of the Bank of England, Charlie Bean, recently warned consumers to brace themselves for a very difficult coming twelve months, stating that the misery was set to deepen in terms of finances, and consumers would have to get used to a lower standard of living. With many consumers already having tightened their belts, and many businesses suffering hugely as a result of the ongoing problems, this could spell disaster for the foreseeable future according to some officials.

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