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Should banks be supporting UK consumers?

The subject of whether UK bank should be supporting UK consumers at his most difficult of times is a topic which has grabbed the headlines over the last few weeks. On one hand on the government is suggesting that banks should reduce their risky investment, while on the other they are adamant that cheaper loans and cheaper finance should be made available across the board. This is a very difficult situation for the banking sector and one which could drag on for some time.

While the UK banking community would love to increase lending in the short to medium term and therefore increase their profitability, they are still very anxious about the state of the UK economy, the property market and the employment market. There are concerns that over lending could backfire spectacularly in the short to medium term and put UK banks in a more precarious position with UK government effectively unable to assist. They would much rather prefer the UK economy to show significant signs of recovery, at which point they would then look to increase lending activity, but so far the signals have been very mixed to say the least.

Short-term caution could give way to medium term optimism if only the banks were able to take positive signals from the vast majority of economic surveys released to the market. When this will happen is anybody's guess!

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