IMF: World faces another credit crunch

The International Monetary Fund (IMF) has warned the world faces a credit crunch similar to that of 2008/09 as the euro crisis forces banks to cut their balance sheets.

In its Washington Spring summit, the organisation said it expects the world's biggest banks to slash their size by $2.6trn (£1.6trn) by the end of next year - representing a 7% squeeze on the size of their combined balance sheets, reports Sky News. If such a scenario plays out, businesses throughout Britain and Europe are likely to face further difficulty borrowing from banks. The IMF said it expects a quarter of this balance sheet crunch to come in the form of lower bank lending, with the rest involving selling off assets and securities. It added the squeeze was already well under...