European Union rules limited the ability of British financial authorities to cope with the crisis at Northern Rock, according to a pamphlet published today by a leading economist.

Low consumer confidence, plunging house prices and the rising chances of a recession in the US will have a “very serious” knock-on effect for the UK, a leading economic adviser in England has warned.

Company directors still believe Britain should not join the euro for the foreseeable future, according to a report today.

Business optimism slipped last month as growth in the economy slowed, according to a new survey.