Global growth will be very weak next year, a senior European banker warned yesterday.

The loans to companies and household in the euro zone has stagnated, raising new concerns about the extent of the credit crunch.

'Problems in financial markets are affecting the real economy across the world and global growth is expected to be very weak next year,' European Central Bank Governing Council member John Hurley said.

He did not give a global figure but the ECB has already cut its forecast for the euro zone, predicting a 1pc fall in gross domestic product next year.

Japan was reported to be considering a $110 billion scheme to buy bad loans from banks, the latest in a series of government moves aimed at fighting the worst downturn since the 1930s.

In Europe, the main stock markets were on track for a 46 per cent loss over the year.

Retail spending in the euro zone fell for the seventh straight month in December.

Analysts forecast more pain for consumers and investors next year as bleak economic news continued to flood in from around the world, but said hopes of more government rescue packages were helping to shore up financial markets for now.

Many forecasters believe the downturn will continue well into mid-next year, with more layoffs and bankruptcies to come, but investors are hoping battered stock markets will rebound sooner in anticipation of a recovery.