No increase for savings protection
- 00:02:36
- ITN
No increase for savings protection
The Government has refused to bring in a blanket guarantee for all savings, despite pressure after other European countries made the move. Following the three-month summer recess, Chancellor Alistair Darling told the House of Commons that 98 per cent of UK savings accounts will be covered by the £50,000 deposit protection limit. Ireland, Greece and Denmark are also protecting accounts fully while the UK has only agreed to extend protection from £35,000 to £50,000 He said: "It's essential that we take action to both support the banking system as a whole - as well as being ready to intervene in particular cases when it's necessary to do so." However, Mr Darling said the Financial Services Authority is consulting on whether to increase the limit further - to "ensure that arrangements here continue to be comparable with international best practice". In Germany, Prime Minister Gordon Brown's counterpart Angela Merkel stepped in to prevent a run on her country's banks as its second biggest mortgage lender teetered on the brink of bankruptcy. Ireland, Greece and Denmark are also protecting accounts fully while the UK has only agreed to extend protection from £35,000 to £50,000. But both Mr Brown and new Business Secretary Peter Mandelson have already voiced concern over the impact of the Irish move. As share prices continue to plummet around the world, Chancellor Alistair Darling said the Government will "do whatever is necessary" to maintain financial stability for the UK and announced the Bank of England will pump another £40 billion into money markets on Tuesday. He said: "I am willing to make further resources available as necessary. The (Bank of England) Governor has made clear that in these extraordinary market conditions, the Bank of England will take all actions necessary to ensure that the banking system has access to sufficient liquidity." Earlier, the first meeting of the new National Economic Council was held in Whitehall amid fears of an exodus of funds from British banks to foreign institutions enjoying state protection. Chaired by Mr Brown, it included Mr Darling and other Cabinet ministers with economic responsibilities as well as Whitehall mandarins, with the aim of co-ordinating action across the Government. Meeting twice a week in the Cobra emergency briefing room in the Cabinet Office, the NEC will effectively work as Mr Brown's economic "war cabinet" for the course of the financial crisis. Consideration was reportedly given to an emergency bail-out scheme under which the Treasury could give the banks billions of pounds in return for shares if the crisis worsens. The Chancellor has said he is ready to take "some pretty big steps that we wouldn't take in ordinary times" in order to restore stability to the UK banking system. But he has rejected suggestions that he should free the Bank of England from its duty to keep inflation in check, in order to permit a sharp reduction in interest rates.
ITN | October 6, 2008
