A lack of credit is the "single most critical problem" for the economy in the short-term, according to the Treasury Committee.
The Treasury Committee also criticised the Government's economic forecasts and its reduction in VAT
In a report on 2008's Pre-Budget statement, the influential group of MPs called on the Government to do more to ease the flow of cash into the UK economy.
The Committee wants the Treasury's lending panel to provide it with regular updates of actual lending by banks into the real economy.
"The Government must ensure the availability of credit increases quickly, and there is still far more work to be done," says Committee chairman John McFall.
"Without that increase in availability, the recovery of the economy will be placed in jeopardy."
The report questioned the Treasury's prediction of a swift economic recovery in 2010, saying the balance of risks was on the downside, and believes the view of fiscal stimulus packages is 'optimistic'.
"The cost of the reduction in VAT is considerable and, in the view of the majority of commentators, the Treasury's analysis of its impact is an optimistic one," it says.
The Treasury Committee also called for more action to protect savers, while balancing this with the need for greater lending.
McFall says: "What sort of message would it send out if we neglect those who have been diligently saving?"
"It is crucial that amid the raft of other measures to get lending going, they are not punished for such diligence. We hope to see the 2009 Budget provide greater support to savers."
Contact: John Bakie, Tel: 020 7484 9805, e-mail: [email protected]IFAonline
Putting the tech into protection
Square Mile’s series of informal interviews
Fallout from Haywood suspension
Launching later in 2019
£80bn funds under calculation