Financial Crisis Has Odd Effects in UK
The most striking example of this was the failure across the board of Icelandic banks. Now you would not expect this to be a major effect on UK householders, but it might be a problem for some time to come. It is not just those UK citizens with funds in Icebank, which went under, freezing all their assets and causing a great deal of consternation among ordinary savers, but many of the local councils in the UK have put taxpayers’ money on the island due to their high interest rates:
The number of councils in England and Wales which invested money in Icelandic banks has grown to 116, depositing a total of £858 million, it has emerged. That works out at about £7 million per council.
It’s a major problem for new chancellor Alistair Darling, who has been in talks with the Icelandic government over the various members of British society in danger of losing their money in Iceland.
However, the most interesting event that has occurred as a result of the financial fallout is related to the referendum on Scottish independence. First Minister of Scotland Alex Salmond has included the referendum as part of his most recent policy promises. His reaction to the fact that two of the major bank failures happen to be leading Scottish banks — the Royal Bank of Scotland and HBOS– has been most satisfying to the prime minister:
The prime minister said the underlying message of the rescue package announced this week for banks, including the Scottish giants Royal Bank of Scotland and HBOS, was that Britain was stronger together and weaker apart.
So bad is the situation that Mr. Salmond had to ask the British taxpayer for £1 billion to help cover the costs of bank failures. The fact that the British government had to step in to bail out both of these banks does make the case that had Scotland not been part of Britain, it would have been in serious financial trouble. There is even speculation that Scotland would be suffering in the same manner as Iceland. In fact, Salmond has been on record comparing Scotland to Iceland:
He also attacked the SNP’s claim that an independent Scotland would perform better emulating smaller countries such as Ireland, Norway, and Iceland — the so-called “arc of prosperity.”
It must really grate Scottish nationalists like Salmond that HBOS (Halifax Royal Bank of Scotland) will cease to be Scottish when it’s taken over by Lloyds TSB, which also owns the Scottish Bank. They are reacting rather badly to the prime minister’s comments on the state of the union.
As it is said in the UK, “it’s early days,” and the effect on the British economy and its people is yet to be determined. It is not clear how long they will be able to snicker at the plight of bankers in the City until they suddenly find themselves in dire straits.
Interesting. I hadn’t heard that unemployment there was so low (I’m a Yank). Up .5% to 5.7%? Pretty good for anywhere, especially for Europe. I bet Brits are used to better and are crying their eyes out, instead of counting their blessings.
Btw, secession is always a bad idea. Always some wanker gets some romantic, nationalistic notions. Always just a power-grab, or worse, self-deluding idealism. You Brits may have your differences with each other, but to the rest of the world, you’re siblings. No one attacks one of you without attacking the other. Never lose sight of that.
Besides, if the Skotti tried to secede, wouldn’t the Queen ratse an Army and march on the rebels, hmm?
Watching the Nats decrying Gordon Brown, calling for Scottish Independence with their hand out to London is most amusing. The verbal machinations of Alex Salmond’s speech to his party conference last weekend were amusing to say the least.
“Interesting. I hadn’t heard that unemployment there was so low (I’m a Yank). Up .5% to 5.7%? Pretty good for anywhere, especially for Europe. I bet Brits are used to better and are crying their eyes out, instead of counting their blessings.”
Many of my fellow Brits like to have a good moan about anything and everything, whether we have anything to moan about or not. We’ve had 10 or so uninterrupted years of the best economic circumstances in living memory but people will still claim that the current Government is one of the worst of all time. The crisis we (and the rest of the world) are going through now doesn’t begin to compare to the misery of the 1980′s but many still wish we were back in the ‘good old days’ where we had a million more people unemployed and our services were either left to rot by the then Government or sold off cheap so they’d have some money to spend in election year tax cuts.
I’ve come to the conclusion that many of my fellow countrymen are idiots with the memories of goldfish.
JoshC – We have the sasme problem here. Obama is fond of saying how we have the worst economy since the great depression, completely forgetting the late-70′s under Carter, also ignoring that things just aren’t all that bad. It’s mostly fear.
Oh, that first post was me. Somehow, the site forgot to remember me. Odd.
Brown has finally admitted that the country is in fact in recession. Not that he really had to tell anyone that but still.
JoshC is obviously living on another planet and you have the memory of a goldfish, or the intellect of one.
Yes Britain had been booming but the conditions for this was laid by that much despised government of John Major, this was in spite of Labour, your lot of idiots inherited a pretty damn good situation, however your lot then went on a spending spree and also failed to keep on top of the city’s worst excesses, the FSA has failed to do its job.
Funny enough Gordon Brown has managed to carry out one of Michael Foots objectives, nationalise the UK banks.
Shall we talk about the 70′s then and one of your chappies running off cap in hand begging to the IMF, and dead bodies unburied for weeks due to strikes. The hard medicine of the 1980′s was so much harder because your lot had failed to do anything right in the 60′s and 70′s.
This current government is the worst of all time, because they wasted a huge amount of money during the good years and they have nothing left apart from creating a huge debt to deal with the recession. If I ran my business like Labour has run the UK, I would be bankrupt and living in a cardboard box.
In my opinion Britain should have been in a nice position to weather this storm based on competent government with inly a slight increase in debt, but your lot of incompetents have taken us right back to the 70′s.
Great site. Maybe I will link to this page.
Good Comment @Marc Malone.
The financial crisis is spreading to all the sectors and the ultimate results will be available by the end of 2009. Anyway the crisis is very crusial to all western markets since its a prestigeous counter movement from these governments and it should show some good results by the mid of next year atleast. But in terms of asian countries, it is a good opportunity to find alternative solutions and reconfirm their best practices followed over the past years. Some of the basic causes of financial crisis is, bad credit loans processed by the financial institutions to the customers and third parties. But in case of growing markets, most of the banks are assuring the creditworthiness of their clients twice since most of the clients are not high profile clients. Hence this didn’t make much impact on their financial systems and processed loan payment shedules.
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it will effect UK the most because 73% of the GDP comes from services sector and financial sector dominates the service sector. Unemploment rate is already up, what next?
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