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Banking bailout cost £850 billion!

The National Audit Office has today revealed the full extent of the UK government's bailout operation with regards to the UK banking sector and money markets. A total of £850 billion has been used to bail out the sector and while the vast majority of this will be returned in due course there is a likelihood of a multibillion pound income shortfall when everything is tallied up at the end of the day. So did the UK government get value for money for its £850 billion investment?

There's no doubt that if the UK government had not stepped in to save the banking sector the UK economy would be in a far worse situation than it is today. Businesses would have died, consumers would have seen access to loans evaporate and many banks would have literally gone out of business. The truth is that the UK banking sector was in reality in a far worse situation than anybody outside of the Bank of England and outside of the government had assumed. While the £850 billion investment is grabbing the headlines, it must be remembered that the vast majority of this will be returned in due course.

It is estimated that potentially £60 billion-£80 billion could be at risk, and while not a small amount of money on its own, in the overall full picture it is not as significant as it could have been.

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