Fresh evidence of the credit squeeze on business has emerged after figures showed lending tumbled by a record £14.7 billion between April and June.

The second quarter slump in lending to “non-financial corporations” is the biggest since the Bank of England’s data began in 1997 – with manufacturing, construction and services worst hit.

The figures are likely to fuel anger over banks holding back on loans to struggling firms despite being propped up by the taxpayer in many cases.

They will also raise doubts over the effectiveness of the Bank’s £125 billion quantitative easing programme to drag the economy out of recession.

Vicky Redwood, from Capital Economics, said: “With the recent bank results highlighting how bad debts are rising sharply, banks are likely just to sit on their cash.”

Bank lending is a politically-charged issue after commitments were extracted from institutions given state support last year. Chancellor Alistair Darling called in bank executives for “robust” Treasury talks last week. Barclays said yesterday it had lent £17 billion in the first half of this year – more than it expected – although many lenders have pulled out of the market since the credit crunch.

The Bank of England figures showed lending to manufacturers was down £4.5 billion on the quarter and almost ten per cent year-on-year – along with a £4.7 billion fall in loans to mortgage and housing credit firms compared with the first three months of the year. The figures follow estimates showing a worse-than-expected 0.8 per cent decline in the economy for the same period.

Unemployment also increased by a record 281,000 in the three months to May to 2.38 million and is likely to hit three million early next year.

Lending to the UK’s powerhouse services sector fell £9 billion and is down five per cent year-on-year. Construction was down £2.1 billion, showing an annual decline of 3.5 per cent, the figures showed.