Businesses and homeowners should see borrowing costs fall and availability of loans improve after Alistair Darling yesterday cut the fees the government charges to guarantee bank borrowing.

The Treasury has been considering extra help for Britain’s banks and changes to the current £250bn credit guarantee scheme as it considers how to ease tight credit conditions. Lenders were told last Thursday that there would have to be a quid pro quo for any extra help, such as an increase in their lending.

'Banks are beginning to extend lending, but there is a great deal more to be done,' the chancellor told parliament. 'By the end of this year we expect some £100bn will be extended.'

Financial Times