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Germany put pressure on UK with total bank guarantee scheme

Slowly but surely we are seeing more and more European governments announcing full savings deposit protection schemes which will see savings protected in their entirety in the event of any bank collapse. This is putting pressure on the UK government to follow suit but there seems to be a resistance to such a scheme, well at least for the moment.

Gordon Brown and the opposition parties recently announced that they were working together to assist the UK in fighting the ongoing economic slowdown. The first part of this joint fight back was the announcement of an increase in the maximum cover afforded to savers by the central compensation scheme. This has been increased form £35,000 to £50,000 per financial institution. However, the move by the Germans (after a similar deal announced by the Irish) has put the UK government in a very tricky situation. Do they promise money they have not got or do they march on with the new limit?

This is a very big call for Gordon Brown because if he follows suit he stands accused of following the crowds whereby if he stays with just a £50,000 limit he will put the UK financial sector at a disadvantage to growing areas of Europe.

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