Banks shy away from risk

These findings could well push forward a slated cut in interest rates as the market constriction continues and the availability of financing is further tightened.

The higher costs incurred by the banks are also pushing them to cut back on their lending to business customers.

A leading UK economist has said that the ongoing effects of the credit crunch will act to push the country's GDP growth to 2 per cent or lower in 2008 and beyond.