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Bank of England confirms rescue bill hits £1 trillion

The Bank of England has today reported that the rescue packages introduced by the Bank of England and the UK government have resulted in £1 trillion of taxpayer's money being pumped into the system. However, more worrying is the suggestion by Mervyn King that UK banks are still nowhere near strong enough to battle for themselves and substantial additional taxpayer funding will be required in the short to medium term.

This is a severe blow for the UK government which had been banking on a sustained economic recovery to attract the attention of UK voters in the run-up to the general election. The potential for Gordon Brown to ask taxpayers to write a blank check for further rescue packages will not go down well and further undermines the already shaky relationship between the Bank of England and the UK government. In recent days we have seen Mervyn King going out on a limb against the UK government party line and certainly setting the cat amongst the pigeons.

There is no doubt that both the government and the Bank of England will need to work together if the UK economy is to recover in the short to medium term although unfortunately both parties seem to be as far away from each other as they ever have been.

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