Why won't the UK government protect ALL of your savings?
As news that Gordon Brown has increased protection for savers to £50,000 per institution is released it seems as though calls for 100% protection of savings have been ignored. This has prompted many to ask why the authorities are not able to guarantee all savings and what they may fear?
While on the surface it may look as if Gordon Brown is not prepared to help, in reality it would not be sensible to guarantee all savings, even in the current crisis. The pressure that this would place on the public purse would be enormous, at a time when money is thin on the ground to say the least. The move from £35,000 to £50,000 is as good a vote of confidence in the UK system as you might expect because in reality that is what it is. It makes no difference if the figure was raised to £100,000, £200,000 or even £1 million, it is the fact the authorities have indicated to the markets that while caution is the watchword the long term future of the UK financial sector is safe.
In reality there are more important things the government could be doing with any extra funding such as offering liquidity to markets, etc.
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