Cost of UK financial sector bailout could hit £140 billion
Lord Turner, the head of the Financial Services Authority (FSA), has spoken to the Treasury select committee today with regards to the overall cost of the financial bailout in the UK. Despite the fact that the Treasury had initially suggested losses in the region of £10 billion-£50 billion, Lord Turner seemed to indicate the cost could be higher with a suggestion of a range between £70 billion-£140 billion.
There is no doubt that there will be a cost to UK taxpayers with significant losses evident on share stakes in Lloyds bank and Royal Bank of Scotland, large-scale capital injection into money markets and a number of loans forwarded to the likes of Northern Rock (which are still to be repaid). However, no matter how large the cost of the UK bailout there is no doubt that the UK authorities had no option in the short term because a collapse of the financial sector would have led to a collapse of the UK as a whole.
It is easy for us to sit back now and suggest that the government made mistakes, the Bank of England made mistakes and the FSA made mistakes but ultimately at the time they were faced with a situation never seen before in living memory. Have lessons been learnt? We hope so........
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