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The global credit crunch is continuing to take its toll on business optimism in the UK, according to a new survey from Lloyds TSB.

The bank says business confidence in the state of the UK economy has fallen for the sixth consecutive month and reaching its lowest level in as many years.

The latest Lloyds TSB Corporate Markets Business Barometer of 200 companies with turnover above £1 million reveals 51 per cent of firms are more pessimistic than they were three months ago about the prospects for the economy, compared with just 28 per cent who feel more optimistic.

But the overall sense of gloom about the economic prospects for the UK were in contrast to companies' views of their own prospects for the rest of the year with 58 per cent of firms saying they expect business activity to increase over the next 12 months and just ten per cent anticipating a decline.

Trevor Williams, chief economist at Lloyds TSB Corporate Markets, said concern over the wider economy had not been helped by the spate of weakening economic news coming from the housing market and falling consumer confidence.

He added: "There's likely to be little comfort on interest rates either, as elevated inflation expectations are becoming a noose around the Bank of England's neck, preventing the monetary policy committee from making large cuts in official interest rates at a time when there is no fiscal slack to significantly boost the economy."

The news follows last week's action by central banks including the Bank of England to try to ease the credit crunch by injecting $200 billion (£98 billion) into the money markets. The move however failed to stop the price of gold rising to $1,000 (£492) an ounce for the first time.

Fears of a US recession remain with the dollar continuing to fall in value and continuing speculation that US investment banks are yet to reveal further billion dollar losses as a result of the credit crunch and sub-prime housing market collapse.

At the end of last week Bear Stearns was forced to seek emergency funds from fellow investment bank JP Morgan Chase with the backing of the US Federal Reserve.

The loan was reported to be over a 28 day term however JP Morgan is also thought to be helping Bear Stearns try to secure a longer term loan.