Despite at least £1.2 trillion of taxpayers’ money being put at risk to bail out the banking system, many of the major high street banks may well be asking for another hand-out from the public purse in 2011, according to new research from independent think-tank nef (the new economics foundation).
These figures raise the question of whether the Government is aware of the problem, and if so, whether the scale of planned cuts to public services is being influenced by the likelihood of another bail-out.
A new report, Where did our money go?, published Monday 4 October 2010, uses Bank of England data to investigate what happened to the bail-out money, two years on from the credit crunch that sent shockwaves through the banking system and just ahead of the second anniversary of the biggest single bail-out in UK history on 8 October 2008. The report finds that:
– There is a shocking lack of information in the public domain about where the money has gone, how it has been used and what has been the ‘quid pro quo’ for the support.
– Interest rates are higher than before the crisis for firms and households, including on mortgages, despite the Bank of England cutting interest rates to historic lows.
– Lending to households and firms has stagnated despite the bail-outs.