The credit squeeze has been a great recoupler. A year ago, the fashionable talk in markets was of Europe’s success in decoupling from the problems of the US economy. But it now appears to have remained firmly coupled to the US financial system.

The European Central Bank’s banking survey for the second quarter, released to little fanfare last week, was disquietingly similar to the Federal Reserve’s survey of senior lending officers a few days earlier. For the first time since the survey started in 2003, it registered a fall in demand for all the three categories of loans which it covers – corporate, consumer and housing.