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Sunday, 4 January 2009

UK Treasury further recapitalisation of banks

Sources close to the UK Chancellor, Alistair Darling, have suggested that he is considering further measures to boost the banking and financial system in the UK. This gives a clear indication that although we have had a bit of a end of year lull, there remain many problems within the financial system.

One key problem is that banks have yet to start lending at a sizable enough level to support business activity.

It has been suggested that the Chancellor will set up a fund to buy toxic assets from banks or exchanged for government bonds. This should help to provide a boost in confidence as the concerns about the balance sheets of other banks and financial institutions are nullified by the government effectively taking away risk.

If these measures do happen, it will be good to see the Chancellor taking a pro-active approach in helping to boost the economy. This will be a useful and practical step which will have real benefits to the whole economy, unlike the costly and pointless cut in VAT.

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posted by Carl Malways at


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