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Could the UK banking sector really have collapsed last year?

As we look back to the UK banking disaster of last year and the rumours that the Royal Bank of Scotland and HBOS were literally on the verge of collapse, could the UK financial sector really have failed?

The truth is that the UK government, and worldwide governments, could not afford for the UK economy to collapse and this meant shoring up the UK financial sector with whatever financial injections were required. As we have seen over the last few weeks, UK national debt has ballooned and UK taxpayers are set to pay the price in the short, medium and longer term, but did the UK government really have any alternative?

The truth is that the UK banking sector was on the verge of collapse, confidence was low, banks were struggling to survive and ultimately bad debts were ripping apart their balance sheets. However, that said, as suggested above, there is no way that the UK government could have allowed the banking sector to collapse as this would have starved the economy of investment, both for businesses and consumers. With no investment there be no economic growth and with no economic growth the job situation would get worse and worse, national debt continue to rise and ultimately the UK would have collapsed.

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