Lenders urged to remain cautious

Lenders should maintain a cautious attitude to lending when the financial markets stabilise, according to one member of the Bank of England’s Monetary Policy Committee.

At a Confederation of British Industry conference last week, Andrew Sentance advised lenders to remain careful regardless of market conditions.

Sentance says: “Even when the market settles down, it is reasonable to an-ticipate a lasting impact on demand and meet this with a cautious attitude to lending.

“The consequences of the credit crunch are likely to be with us for some time as the turbulence has been more sustained than expected.”

He says how much the weakening pound dampens consumption will de-pend on the extent to which consumers feel their incomes are squeezed, with the property market suffering most.