The government may have underestimated the impact of the credit crunch on economic growth, an influential committee of MPs is warning today as figures emerged that increasing numbers of overstretched businesses are going bust.

In a report published on the March Budget, the Treasury committee has cast doubt on the government's growth forecasts warning that they are significantly above those published by most commentators and give little consideration to the risks posed by financial market turbulence that has already seen beleaguered Northern Rock taken under state control.

Committee chairman John McFall, MP for West Dunbartonshire, said: "The Treasury's forecast of economic growth in the next two years is more optimistic that the consensus view. Critical to this forecast is the resilience of the UK economy to shocks."

The Treasury is predicting economic growth this year of 1.75% to 2.5%, 75 basis points lower than its expectations a year ago. It then sees a sharp rebound in 2009 with growth of 2.25% to 2.75% and 2010 of 2.5% to 3%.

Chancellor of the Exchequer Alistair Darling has made much of the UK economy's resilience in previous market turbulence including the bursting of the stock market bubble in technology stocks in 2000 and the Asian economic crisis of the late 1990s.

But committee members are concerned that rapidly-rising house prices, close links with the now faltering US economy and reliance on the financial services industry, all of which boosted the economy in past years, are now holding it back.

McFall said: "Some of the very things that have kept our economy growing over the last decade may start to cause us problems and the 2008 Budget may not have recognised this fully."

His comments came as information services company Experian revealed that business failures in the UK increased by 8.5% in the first quarter of 2008 compared to the year before with 4798 businesses going under.

Seeing particularly sharp rises in failures were areas such as financial services, with 34 businesses going under and property, which lost 150 companies.

One glimmer of good news was that businesses failures north of the border were actually down 14.6%.

Tony Pullen, managing director of Experian's business information division, said: "These figures are hugely significant, highlighting the impact the continued credit crunch is having on businesses across the UK. It's the first overall increase in failures we've seen for 12 months and demonstrates the nervousness there is in the economy."

In such a climate, financial analyst Global Insight is predicting the Bank of England will slash rates this week.

Howard Archer, its chief UK and European economist thinks that the "increased downside risks to the growth outlook" will be enough to persuade the Bank's monetary policy committee to cut rates from 5.25% to 5% despite the continued risk that inflation in the UK is rising.

He now expects interest rates to fall to 4.25% by the end of 2008 and hit 4% in the first half of 2009 as faltering growth halts wage growth and trims inflation worries.

The Treasury committee has also called for action to be taken to help with some of the more direct consequences of the credit crunch, most notably for mortgage support schemes for lower income homeowners in difficulty.

Members want such measures considered by a working group, established by Darling in March, to consider ways of reopening the mortgage-backed securities market which has been closed since the summer when investors started worrying about the quality of the loans behind them and cut off an important supply of finance to banks. The group is due to present proposals at the time of the pre-Budget report in the autumn.

The committee has also said it will monitor attempts by the government and the Financial Services Authority to promote the supply of and demand for long-term fixed-rate mortgages.

Also, worryingly for the government, the committee cast doubt on whether it will receive as much tax as expected in future especially given economic forecasts that "are subject to considerable downside risks". McFall said: "There are significant downside risks to the economy, and therefore potentially to tax receipts. As such the government is going to have to be extremely vigilant in how it manages the public finances if it wishes to maintain its so far clean record in meeting its own fiscal rules."