The eurozone crisis has left UK banks unable to raise the funding they need to make loans to businesses, evoking the spectre of the crunch that followed the collapse of Lehman Brothers.

And on one critical measure — the cost of insuring banks against going bust — lenders are already facing tougher conditions than at the height of the crunch, the Bank said.

Sir Mervyn King, the Bank’s Governor, said that because of the eurozone crisis, households, companies and banks face a period of extraordinary uncertainty, including a possible slide back into recession. “There is weakness over the next few quarters. No one can know what precisely the outcome will be,” he said.

“In the last three years, we have seen extraordinary events. Who knows what’s going to happen tomorrow, let alone next month?”

The banks can only issue loans to companies and home owners if they can find sufficient funding on the markets. According to the Bank of England’s inflation report, banks’ funding in the three months to September fell to levels not seen since Lehman Brothers, the US investment bank, crashed in September 2008.

But Sir Mervyn said markets should not be “too depressed” about bank funding, and insisted that British banks are stronger than their European counterparts.

He conceded that he is considering “a variety of contingencies” if funding conditions do not improve. The Treasury is also understood to be contingency planning for a credit crunch.

The report warned that if banks cannot find sufficient funds it will “curtail the amount they lend to businesses and households, through reductions in the availability of credit or increases in loan rates”.

The Coalition has tried to enforce a rise in loans, but banks must raise a further £200 billion-£300 billion next year just to maintain their current lending levels.

Averting a second credit crunch will depend on whether the eurozone can find a solution to its debt problems, Sir Mervyn said.

“From August onwards, public markets have generally been closed, that in part is a response to concerns at what’s happening in the euro area,” he said. He admitted that he did not know if such a deal will be struck. “We have no idea how this will be resolved,” he said.

The Bank cut its estimates for growth this year from 1.7 per cent to one per cent and more than halved its prediction for next year from 2.2 per cent to one per cent.