Lend, lend, lend. To judge from the statement accompanying the UK government’s bail-out of British banks, that is the message Whitehall mandarins will be sending to mortgage lenders. The Treasury is insisting, as a condition of the UK recapitalisation plan, that banks receiving public funds maintain competitively-priced lending to homeowners and small businesses at 2007 levels for three years.

Desperate to prop up the plunging housing market, the government is fearful that credit withdrawal by the banks will deepen the looming recession. It does not want the banks to perpetuate the lending practices of yesteryear, which saw them compete to offer 100 per cent loan to value mortgages to first time buyers borrowing five times self-certified incomes. But striking a happy balance, so that the overall mortgage market does not actually contract, will be fiendishly difficult.