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Libor rate falls as rescue package kicks in

There are tentative signs that the UK financial rescue package is starting to have an impact with news that the Libor (London InterBank Offered Rate), i.e. the interest rate at which banks lend between themselves, has fallen to just under 6.3% for three month loans. The fall of 1.6 basis points is the first piece of good news from the money markets for sometime and is sure to give the stock market a boost tomorrow.

Lending between banks and institutions is the key to this recovery phase and without it the rescue package will just fade away and die. The injection of cash into the system by governments around the world seems to have given markets renewed hope and seen confidence rise off the floor. While it is not a quick overnight fix the fact that markets are showing some liquidity again is a massive boost.

The more money flowing through the system, the more confidence that many companies can beat the squeeze and survive. This helps the UK economy, prospects for jobs and the tax intake for the authorities. The building blocks are in place and it is just a case of putting them back together with a sound base for the future.

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