Evidence that the credit squeeze will hurt the UK economy emerged on Wednesday when a Bank of England survey showed companies were likely to be hit hard by higher borrowing costs. This was followed by one of Britain’s biggest housebuilders reporting plummeting sales in the wake of the Northern Rock crisis.

The news came as recriminations over the handling of Northern Rock continued with Richard Lambert, director-general of the CBI employers’ organisation blasting the Bank, the government and the Financial Services Authority at a dinner in Newcastle on Wednesday night.