UK banks will face a funding gap of £25bn by the next year which could force them to seek yet another state-funded bailout, says a report by the New Economic Foundation (NEF).
Titled 'Where did our money go?' the report shows that there has been a "shocking" lack of information on how the estimated £1.2trn of taxpayer money, used to bail out the banking sector, has been used so far.
Moreover, borrowing rates are now higher than they were before the economic crisis and new lending to households and businesses is languishing, the report added.
NEF says that the banking sector needs urgent reform and warned that the results of current enquiries would come too late. The Independent Commission on Banking (ICB) enquiry, which began last week, will submit its findings only next September.
The report also warned that the sector would fall into another crisis when current means of financial support, such as the Bank of England's £185bn Special Liquidity Scheme (SLS), come to an end.