The crisis in the markets exacerbates turmoil in the housing market. The Council of Mortgage Lenders disclosed yesterday that £22.6 billion was advanced last month, the lowest figure since May 2005 and 25 per cent down on November's total. Meanwhile, Nationwide said it was raising some home loan rates, despite a recent cut in the Bank of England base rate.
The High Street is also suffering, with figures showing disappointing pre-Christmas sales. Justin Urquhart-Stewart, of Seven Investment Management, warned: "There is a very good chance of a retail-led recession and, although the market will recover, trying to judge when it turns is like trying to catch a falling knife.