There's nothing in the latest Bank of England data to give even a crumb of comfort that the credit squeeze will end any time soon. Indeed, conditions are going to get worse before they get better. The transmission of pain from the financial markets to the wider world is now going at full throttle.

Credit is being rationed, the price of debt raised and banks are demanding ever greater concessions from anyone requiring a loan. The contrast with 15 months ago - when credit was near-infinite and very cheap - is profound.

Households and firms are having to adjust to a very different world. For those lucky or smart enough to have timed a new mortgage or credit line just before August last year, even now change is not apparent.

But every month hundreds of thousands more householders and thousands more companies are having to go cap in hand to banks as those attractive deals expire or need to be augmented. It is then they discover how the temperature has plummeted.

This is an adjustment that needs to happen. The credit splurge of the past 15 years created economic imbalances that have to be straightened out. Weening ourselves off excessive debt is going to be hard, but it is necessary - for borrowers and lenders.

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