Where has all the UK government investment gone to?
Amid concerns that the UK banking sector as a whole may not be able to withstand a further downward lurch in the UK economy, analysts are now asking the question, where has all the money gone?
The UK government has invested billions upon billions of pounds into the UK banking sector, increasing liquidity, buying back "risky assets" and acquiring large share stakes in a number of UK banks. However, share prices have collapsed, liquidity has not improved and even now there is talk that the UK banking sector may not be able to withstand a further downward move in the UK economy. However, when you consider the limited success of the multibillion pound investment into the economy and the banking sector by the government, where would we be without this?
As we approach the next general election the UK government is desperate to raise significant funds to offset potential tax rises next year and keep voters on their side. However, with net debt rising significantly, for at least the next five years, large budget deficits forecast and limited economic growth it does not bode well for Gordon Brown. If he had been able to turn around the UK banking sector and enjoy a return on his investment, i.e. taxpayers money, he would have come out of this situation as a hero. Unfortunately this has not happened yet and appears unlikely to do so over the next 12 months.
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