Households will find it even more difficult to gain access to credit than was thought three months ago despite the Bank of England’s initiatives aimed at boosting lending to the economy, according to a survey.

Ernst & Young’s latest Item Club report, published on Monday, expects banks to shrink lending to consumers by 10.5 per cent over the course of 2012. In April, the Item Club forecast a 7.6 per cent decline in lending to households.

The Item Club blamed the double-dip recession for the weakness in lending and downgraded its economic forecast for 2012 from 0.4 per cent to no growth.

However, business lending was now expected to contract by 6.2 per cent, slightly less than the 6.8 per cent forecast in the spring. Overall, the survey expected bank lending to shrink by 2 per cent this year.

The Item Club’s pessimism comes in spite of the announcement last month of the Bank of England’s Funding for Lending scheme, which aims to provide cheaper and more plentiful credit to businesses and households by lowering banks funding costs if they continue to provide loans. The BoE released details of the scheme earlier this month.

The Item Club said lenders could prove reluctant to participate in the scheme, in spite of the lower borrowing costs, because of the stigma attached to having to seek funds from central banks, rather than markets.

HSBC, which is largely funded by customer deposits and is considered safe enough to borrow from markets cheaply, has already said it will not take part.

The survey also said the scheme’s benefits could be offset by the weakness in the economy.

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