Consumers 'will suffer from reduced credit'

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Consumers 'will suffer from reduced credit'

Losses by banks due to the recent global financial turmoil will hit people seeking loans and mortgages, it has been claimed.

Heather Stewart wrote in the Observer that mortgages are rarer and more expensive and businesses are struggling to obtain loans.

"Now that the credit taps are being turned off, consumers and businesses across the UK will be hit," she wrote.

According to her analysis, lenders have been reducing their rates over the past fortnight, but volatility among the world's banks means costs may rise again.

In addition, most economists think a prolonged period of economic weakness has begun.

Ms Stewart also noted that the effect such events as takeovers and corporate demises have on the wider economy can take a while to become apparent.

John Gieve, Bank of England deputy governor, has said that the Bank has "adapted its money market operations" to provide necessary liquidity in the banking market.

He added that the Bank would work to bring back calmer financial market conditions and said long term measures would be necessary.

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