The mystery over the Bank of England's £26billion secret loans deepened yesterday as ministers refused to say whether other banks had sought similar lifelines. Chancellor Alistair Darling didged the issue when delivering an emergency statement in the House of Commons, saying he would not provide a 'running commentary' on the topic. He said any questions on who had received loans were 'plain daft' and 'really rediculous.'
Several major lenders adopted a similar line yesterday, refusing to reveal whether they had received secret emergency funding. The confusion came after Bank of England Governor Mervyn King stunned MPs on Tuesday by revealing that Royal Bank of Scotland had benefited from vast, previously undisclosed loans. The secret aid neared £62billion last October, helping shore up their brittle finances and preventing a total collapse of the UK banking system.
The Treasury launched a high-profile rescue of the two firms the same mnth, injecting £37billion of public money , leading to their part nationalisation. They immediately prompted questions about whether other banks had sought under-the-counter assistance from the authorities. Sources claimed other, smaller lenders may have been forced to run to the Bank of England for covert aid which has yet to be revealed. But the banks themselves were tight-lipped on the subject yesterday. Spokesman for lenders including Santander - which owns Abbey as well as Alliance & Leicester - and Barclays, Nationwide and HSBC refused to comment last night.
Only a spokesman for London based Standard Chartered would say publicly that it had not sought any secret loans from the Bank of England, adding that it was 'one of the few banks in the world that hasn't taken anything' in government aid. In a Commons debate yesterday Liberal Democrat Treasury spokesman Vince Cable asked Mr darling for a 'categorical assurace' that no other companies had secretly run cap-in hand to the bank.
Mr Darling brushed the question aside, calling it 'really rediculous.' He added: "No Chancelor or Governor of the Bank of England is provcide a running commentary on what they may or may not be doing for perfectly obvious reasons. I just think such a question is just plain daft really." He claimed the financial system is now far more stable than it was last October, when banks were reeling from the aftershocks of the collapse of investment bank Lehman Brothers.
The recession is lasting loger in Britain than in almost any other major economy, official figures revealed yesterday. Britains economy slipped 0.3 percent in size between July and September compared with the previous three months, the Office for National Statistics estimates. This is a slight improvement on the ONS's first estimate of a fall of 0.4 per cent, published last month and greeted with disbelief by economists, but revised yesterday.
The figures confirm the worrying fact that this is the longest recession in the UK since records began in 1955, with the economy contracting for six consecutive quarters. It means Britain is trailing the rest of the world's major economies, such as America, Germany China and France, where the downturn has officially ended. In America, for example, GDP (Gross Domestic Product) exoabded 0.9 per cent in the third quarter of the year. The Eurozone economy collectively grew by 0.4 per cent during the same period.
The Tories seized on the ONS figures, accusing them of destroying the Prime Minister's claim that Britain was bette placed than other countries to come through the financial crisis. Shadow Chancelor George Osborne said recently: "Its is great news that so many economies are now growing, but it begs the question: Why is Britain still in recession while the rest of the world recovers?"
Yesterday ecoomists said the figures may be marginally better than the previous quarter, but the outlook remains bleak. The British Chambers of Commerce described the ONS figures as 'disappointing', particularly because Britain is lagging behind other major economies. But Bank of england policy maker Andrew Sentance said that the economy was actually likely to have started growing again sometime during the second half of this year. He said: "When the exact turning point took place is very difficult to pinpoint and I think it may take a while for the official GDP figures to catch up with that."
Johnathan Loynes, chief European economist at the consultancy Capital Economics, agreed the official figures will probably show next year that the recession ened at some point between October and December this year, but warned: "The recovery will be lacklustre."
Articles taken from the Daily Mail 26/11/2009