John Varley, Barclays’ chief executive, said in a recent interview with the BBC that bank lending will take one to two years to return to normal, and asset prices need as much as 18 months to stabilise.

Varley told BBC television that banks were still lending, but there needed to be a reduction in the overall amount of debt in the economy. He said: “I think that we will see the process of reduced borrowing play out over at least the course of the next 12 months ... maybe 24 months. That is a painful process but it’s a process through which the world absolutely has to go.

“As soon as asset prices stabilise, then we will see the financial economy recover. And when will that occur? That will occur some time over the course of the next 18 months.”

In a separate interview with Sky News earlier in the week, Varley said that he expected British house prices to fall a total of -30% from the peak values set in summer 2007.