BANK of England deputy governor Charlie Bean yesterday said that the big UK banks would be "well advised to take advantage of any opportunity" to strengthen capital so they can ride out any further economic deterioration without having to constrain lending.

Mr Bean, in a speech to a Council of Mortgage Lenders conference, offered this advice to the big UK banks even though he acknowledged they would not be required to raise capital as part of the deal among European leaders to “buttress the resilience” of the Continent’s banking sector through recapitalisation.

He noted recent “heightened funding difficulties” of UK banks given their “inter-linkages with euro-area banks”.

Mr Bean said: “While the major UK banks will not be required to raise capital, they would nevertheless be well advised to take advantage of any opportunity that does arise to further strengthen their capital and liquidity buffers, thereby putting themselves in a better position to withstand any further deterioration in conditions, without needing to constrain lending.”

He acknowledged the Bank of England Monetary Policy Committee’s view of the economic outlook had “shifted dramatically” in recent months.

He identified the two primary drivers of the slowdown in growth as “heightened tension in financial and bank funding markets associated with the twin euro-area banking and sovereign debt crises”, and the “substantial rise in energy and other commodity prices”.

He noted the latter influence had borne down further on consumers, adding: “That has added to the squeeze on real household incomes … taking place as a result of earlier increases in energy and other import prices, together with the increase in the standard rate of VAT to 20%.”

He calculated, in the eight quarters since the trough of the recession in the middle of 2009, real household income had fallen 2.5%, and he said it was probable it would have dropped in the second half of this year too.