Chancellor reassures banks on specific action
by Gill Montia
Story link: Chancellor reassures banks on specific action
The Chancellor of the Exchequer, Alistair Darling, has stated that the Government will assist banks that get into difficulties.
Speaking on the BBC’s Andrew Marr Show, Mr Darling outlined the Government’s generalised support for the UK banking sector and confirmed that if a bank is in danger of collapse, specific action will be taken, as in the case of Bradford & Bingley and Northern Rock.
Referring to last Friday’s announcement by Bank of England Governor, Mervyn King, Mr Darling spoke about the additional £40 billion that will be made available to banks over the coming week, as an example of generalised action to stabilise the UK banking sector.
The question of whether the Bank of England should be released from its 2% inflation target during the current crisis remains up for debate.
The Chancellor made it clear that he is reluctant to abandon the target, although such a move would give the Bank greater freedom to cut the base rate.
He also indicated that the Government would increase its borrowing, rather than raise taxes and take money out of the economy, explaining that Government debt has decreased over the past decade, leaving room for manoeuvre during the economic downturn.
When asked if the Treasury had a list of UK banks that could be in trouble, Mr Darling said the Treasury was constantly monitoring the situation, not just in Britain but around the world.
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