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UK banks and mining companies under pressure

Last week's fall in the UK stock market was predominantly a result of a lack of confidence in the banking and mining arenas which are both being impacted by worldwide economic turmoil. Despite the fact that only a few weeks ago it was hoped that the UK, and other leading economies, would pull well away from recession and begin to consolidate for the future, this may not be the case.

The banking sector is vital to any recovery in the UK economy in the short, medium and longer term because without finance there is very little that businesses can do to pull themselves out of the ongoing economic turmoil. We are seeing more and more businesses in the UK falling by the wayside because of a lack of short-term financing which many believe is due to a very short-sighted approach by the UK banking industry.

As the UK government looks to reduce the UK budget deficit over the next five years this puts David Cameron in a very difficult position from which to try and get UK banks to increase liquidity in the business arena. When you also take into account difficult liquidity conditions in the area of consumer finance we could well be on the verge of a very difficult few months with regards to the UK economy.

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