UK Banks Set to Demand Fresh Bail-out in 2011, Warns nef
Despite at least £1.2 trillion of taxpayers’ money being put at risk to bail out the banking system, many of the major high street banks may well be asking for another hand-out from the public purse in 2011, according to new research from independent think-tank the new economics foundation (nef). Banks borrowing requirement set to double next year to £25bn a month to plug funding gap.
These figures raise the question of whether the UK government is aware of the problem, and if so, whether the scale of planned cuts to public services is being influenced by the likelihood of another bail-out.
The report, ‘Where did our money go?’, uses Bank of England (BoE) data to investigate what happened to the bail-out money, two years on from the credit crunch that sent shockwaves through the banking system and just ahead of the second anniversary of the biggest single bail-out in UK history on 8 October 2008. The report finds that:
“The financial crisis resulted in a massive socialisation of losses after decades of private gain,” said Tony Greenham, head of the finance and business programme at nef and co-author of the report. “The public have already paid for the failure of the banks twice, first by bailing them out, and then by suffering a programme of drastic cuts to public services to appease the financial markets. We need urgent reform of the banking system to ensure that bailed-out banks are not allowed to repeat their failures. The government should ensure that banks use public money in a way that is socially useful and which prepares Britain for the ‘Great Transition’ to a low carbon economy.”
nef is calling for a comprehensive package of reform, including:
nef believes that an effective banking system is one that can channel resources into financially sound investment that creates social value without causing environmental degradation.