Is the banking crisis over?
The recent report by the BBC panorama programme has today cast further doubt on the recovery in the UK financial sector after suggestions that two major UK banks were very close to going out of business. While it would be foolish to suggest that the UK is out of the woods yet there is a feeling that both confidence and stability in the banking sector have improved substantially of late even though liquidity levels are nowhere near those of last year.
The government has literally pumped billions upon billions of pounds into the system, provided substantial loans to UK banks and been on hand to increase liquidity as and when required. The ongoing downward movement in UK base rates will also kick in at some stage with rates set to move towards 0% as seen in the US. While it will be foolish to suggest that a further serious downward movement in the worldwide economy would not cause more problems there is a feeling that the worst is over although a return to "normality" may yet be some way off.
However, on a negative note it has to be said that reports such as that from panorama do not help consumer and business confidence in the financial system which could at some point come back to haunt them.
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