UK banking sector set to shrink in the short term
Comments by David Mills, a member of the Bank of England's Monetary Policy Committee, seem to indicate that the Bank of England is readying itself for a significant reduction in the size of the UK banking sector. It goes without saying that the sector is under pressure in the short term although the main reason for the expected reduction in the future is purely than simply because of a change in capital requirements.
It is well-known that the Bank of England, along with the Financial Services Authority (FSA), is currently pushing through a number of changes which will see banks forced to keep more capital and "near money" assets in reserve to back their operations. This will obviously take away much-needed capital from the core business and ultimately this is where the shrinkage will come in the UK banking sector. While David Mills believes that the short-term pain will be more than offset by the long-term gain of a safer and less volatile banking system, there are those who do have reservations about his comments.
However, one thing is for sure, the UK banking sector which entered the current recession will be almost unrecognisable compared to the one which will be in place after the recession is over.
Share this..
Related stories
UK economy growth continues apace
Growth in the British economy has not been halted by five interest rate rises over the last year, official figures have revealed.The government says that in the second quarter of 2007 GDP growth was measured at 0.8 per cent, compared to the 0.7 per cent figure recorded in the previous three months.According to the Office for National Statistics (ONS) the rise was caused by "stronger production and...
Read MoreIs there a triple whammy on the way for the UK economy?
There are growing concerns over a potential triple whammy with regards to the UK economy with high inflation, high unemployment and subdued growth in the economy. If this was to happen, and it is still a big if, this could decimate the UK economy and push the country back into recession at a time when there is no additional funding available to the government to bail out the economy. So where woul...
Read MoreIf the European Union won't bail out Greece then who will?
As the Greek saga continues to worsen there is concern that if the European Union is unable or unwilling to help in the short to medium term then who else can the Greek authorities turn to? While it is likely that the European Union will cut Greece adrift, with analysts expecting some form of financial assistance in the short term, we also have the International Monetary Fund waiting in the win...
Read MoreBudget Headlines : UK economy set to increase by 3.5% annually from 2011
UK economy set to increase by 3.5% annually from 2011...
Read MoreUK retail sales figures disappoint for January
Retail sales figure in the UK fell 1.8% in January, compared to December, although the figure was actually a 0.9% increase year-on-year. This is the sharpest monthly fall in UK retail sales since February 2009 and has led to renewed concern about the underlying state of the UK economy. When you also consider that December sales were revised downwards from a 0.3% increase to 0.2% decline month on m...
Read More