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On the eve of what is sure to be Alistair Darling's most important political statement there is speculation and counter speculation about how he will address the situation of the UK economy next...
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Friday 3rd October 2008
Savers are to have £50,000 of their deposits guaranteed by the government from next Tuesday.
The move, raising the limit from its current £35,000, was announced by the Financial Services Authority (FSA) today.
In a statement, the regulator added that the authorities will do "whatever is necessary" to protect savers at a time of highly unstable market conditions.
The nationalisations of Northern Rock and Bradford & Bingley - along with the takeover of HBOS by Lloyds TSB and the recent fluctuations on stock markets - have knocked savers' confidence, heightening fears of a run on a bank.
In turn, this could lead to further crisis in the financial system - with institutions put at greater risk of collapse.
Hector Sants, FSA's chief executive officer, said: "There has been extensive debate about the compensation levels. In the interests of providing clarity over the minimum level for the long term we have now decided to implement the move to a £50,000 limit from Tuesday.
"This change ties in with the introduction of the government's Banking Bill in parliament which is due next week, and is also appropriate given the consolidation that has taken place in the banking sector."
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