The Treasury insisted yesterday that banks benefiting from the government’s £37bn capital injection must commit themselves to maintaining competitively priced lending to homeowners and small businesses at 2007 levels.

The move caused concern among banks and building societies that believe mortgage lending hit a highwater mark for carelessness last year. But economists argued that the move reflected the government’s concern that without intervention, the economy ran the risk of a withdrawal of credit on a scale not seen since the 1930s.

Financial Times