Loans to eurozone households and businesses fell for the first time ever last month in the latest sign of the continued fragility of the economy and the uncertainity of a recovery.

Lending dropped 0.3 per cent in September from a year earlier, according to the European Central Bank (ECB). It was the first year-on-year drop since data was first collected in 1991, the ECB said.

The situation mirrors the UK, where a lack of available credit from banks desperate to hoard cash has been seen as a major obstacle to the nation's emergence from recession.

Earlier this week, David Cameron, the Conservative leader, said it was "astonishing" that 12 months after the bank rescue lending to businesses was still falling.

He said that a "lack of credit, coupled with big margins between the interest rates at which the banks can borrow and the rates at which they lend, is still sapping demand from our economy".

In a bid to encourage lenders to inject more money into the financial system, the Bank of England has threatened to penalise high street lenders by cutting the interest it pays on cash held by them in its reserve accounts.

The Government is also to instruct Lloyds Banking Group and Royal Bank of Scotland to lend £27 billion to small and medium-sized businesses amid questions over why they say they cannot meet lending targets promised to the Treasury at the time of the taxpayer bailout.

The fall in eurozone lending came despite the ECB lending banks billions of euros of extra funds and urging them to pass it onto customers.

Jean-Claude Trichet, ECB president, warned earlier this month that "uncertainty remains high" regarding the recovery from the recession.

Despite the call to pass on their funding to customers, many banks look instead to be concentrating more on rebuilding themselves and building up a cash pile.

Yesterday ING, the Dutch banking group, bailed out by its Government last year, announced that it would sell its huge insurance business and launch a €7.5 billion (£6.8 billion) rights issue as it seeks to repay some state aid much earlier than expected.

It said it would pay back €5 billion to the Government in December and a further €1.3 billion in state guarantees that it had received.

The ECB figures showed that, on a monthly basis, lending rose slightly.

Corporate lending shrank 0.1 per cent over the year and loans to households fell 0.3 per cent.

The figures also showed that the annualised growth of M3 money supply — a broad measure of money available to spend — slowed to 1.8 per cent from 2.6 per cent in August.

Earlier this month, the International Monetary Fund named Britain as one of the countries most vulnerable to a credit shortage between now and the end of next year.

Its closely watched Global Financial Stability Report estimated that demand for loans would outpace supply by £280 billion this year and by £150 billion in 2010.

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