Banks insist they are still lending to companies in riskier areas such as construction, though there are signs of far greater caution.

The CBI employers’ organisation has appealed to banks to step up lending this winter when large numbers of businesses will need to refinance.

Yesterday, banks such as Lloyds TSB, National Australia Bank, Royal Bank of Scotland and Barclays said they were still lending to the commercial property and construction sectors – although each business proposal was judged individually on its merits and had to meet certain credit criteria.

For their part, people in the property and construction industry said while existing loan agreements were being honoured, no fresh lending was available.

Banks say they are less wary of financing housebuilding or the redevelopment of commercial property that can show a rental income. But many are reluctant to finance new commercial developments.

Financial Times