Credit crunch 'far from over'

Date: 17th September 2008

The collapse of the bank Lehman Brothers this week suggests that the credit is far from over, according to one economist.

Although central banks have moved to reassure markets this week, it is widely expected that Lehman's collapse will lead to even tighter lending conditions.

Lehman filed for bankruptcy on Monday (September 15th), a day when the world's stock markets fell into a collective meltdown.

Michael Baxter, an economist with Defaqto, said on the collapse of Lehman Brothers: "It … suggests the credit crunch is not over or near the end of halfway through as people have suggested because the banks are going to be even more reluctant to start lending to each other after this.

Lehman announced its bankruptcy after revealing net losses of £2.17 billion for the third quarter of 2008.

A report published on ft.com this morning claimed that the economic downturn could result in an income taxation rise of 5p in the pound.