Speaking at the British Bankers’ Association’s annual conference in London, he said the euro zone crisis is a major obstacle with lenders only able to fully repair their balance sheets once the crisis is dealt with.

“The eurozone crisis, probably more than any other single cause, is why banks are finding it difficult to repair their balance sheets.

“It is the elephant in Britain’s economic room. The scope for a UK recovery will remain precarious until the euro recovery takes root,” said Tyrie.

He also explained to the audience how sales incentives for UK bank staff should be “better aligned to the interests of shareholders and customers.”