More hot air from the Treasury or the real deal?
As rumours circulate Whitehall that Alistair Darling and Lord Mandelson are preparing to call in the U.K.'s leading banks for a "chat" there are differing opinions on the likelihood of a successful outcome. The UK government has been particularly critical of the UK banking sector over the last few weeks and many believe that bad blood between the two parties could hinder tense negotiations.
Many market observers believe that the government could be forced to increase regulation and possibly consider the legal route to place yet more pressure on the UK banking sector to increase liquidity to the consumer. There is also the question of business credit which has been very much at the forefront of the UK financial markets over the last few weeks. Unless this credit appears in the short term there are literally hundreds of UK businesses on the brink of collapse, companies which would normally have been able to fight the UK slowdown if traditional funding methods had been available.
This will be the first of many tense meetings between the UK government and various financial sectors which appear willing and able to take on the government in the face of public criticism and pressure. Quite how the meeting will pan out remains to be seen but it will be interesting to see what line the UK government decides to take.
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