Technology spending by banks is slowing down due to the credit crunch, according to the latest survey from the Confederation of British Industry (CBI).

Up to 11,000 jobs could be cut from the UK's financial services industry over the three months, the CBI forecasts in its stark report.

Its latest Financial Services Survey, conducted in conjunction with PricewaterhouseCoopers, reported that the sector suffered a troublesome first quarter of 2008, with higher operating costs and a sharp fall in profitability, and gave a gloomy outlook of rising borrowing costs for the coming six months.

"Plans for capital investment in the year ahead are very weak, with plans for spending on IT flat," said a statement from the CBI.

Ian McCafferty, chief economist at the CBI, commented: ""We can expect further tough times in the financial sector, and as this feeds through into the wider economy it will inevitably be felt through slower economic growth this year and next."