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UK banks set to struggle in first half of 2009

Indications from the money markets are suggesting that UK banks will struggle again in the first half of 2009 with demand and liquidity set to fall again with the possibility that the banks may need to return to markets to raise more money. However, as we have seen throughout 2008, investors are reluctant to invest more money into businesses which are struggling and again the government could be forced into a substantial bailout which the UK can hardly afford.

The problem with the current downturn is the fact that nobody has seen one quite like it with so many problems coming from so many different angles around the world. Historically a recession in the UK has often been assisted in the recovery process by a strong US and European economy. However, this time the UK is struggling as well as its European and US counterparts which can offer very little assistance in the short term. A number of government led fiscal stimulus initiatives have so far failed to kick in and the UK consumer, while spending heavily over Christmas, is set to disappear from the high streets in the New Year.

While the government has tried to be upbeat in these troubled times it is known there are grave concerns within the walls of power.

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