British Prime Minister Gordon brown, and the Chancellor Alistair Darling, yesterday unveiled a staggering £500 billion injection to rescue British banks - equal to a £20,000 bill for every British taxpayer.
The Sun, as only a British newspaper can, dubbed it "Thundersplurge is go! International rescue!"
The IMF has also forecast that the British economy - which has gone longer than any other G8 country since it last had a recession - will bounce back and predicted it will grow 2.2% in 2010.
Frozen markets refuse to thaw
Rescue plan ... Chancellor Alistair Darling and PM Gordon Brown at Number 10 yesterday
By Staff Reporter
The Sun
9th October 2008
Go to The Sun's website, here - http://www.thesun.co.uk/sol/homepage/news/money/article1785808.ece to see Chancellor Alistair as a Thunderbirds puppet!
THUNDERBIRDS lookalike Alistair Darling's international rescue effort showed no sign of kick-starting money markets today.
Despite the bushy-eyebrowed Chancellor's dramatic salvage bid, the rate at which banks lend to each other got bigger.
Figures showed the three month rate - a key measure for mortgage costs - widened to 6.28 per cent from 6.27 per cent.
This puts it almost two per cent above the Bank of England’s 4.5 per cent base rate after yesterday’s shock half-point cut.
Investec economist Philip Shaw said the quarterly lending rate was “disappointingly high”.
Rescue
New figures also showed British homes have plummeted in value to pile on the misery for property owners.
Nearly £26,500 was wiped off the average house price, the UK’s largest mortgage lender Halifax said.
Britain has suffered it's biggest ever house price drop over the last year.
Prices dived more than 13 per cent in September, the biggest fall ever recorded by the bank's house price index.
The rate of decline was worse than feared. The average UK home now costs £172,108, around the same level as in January 2006.
But banking shares have been boosted by the resuce package today.
HBOS shot up 16 per cent and Royal Bank of Scotland rocketed by 19 per cent after the FTSE index opened this morning.
The market was up 1.5 per cent after interest rate cuts across the world fuelled a recovery.
Darling teamed up with American and European finance chiefs yesterday to try to stave off a global slump.
Darling’s staggering £500billion injection to bail-out Britain’s banks is equal to a £20,000 bill for every single taxpayer.
The Chancellor and Prime Minister Gordon Brown gambled everything on a scheme to save the banks and prevent a recession.
Mr Darling began pulling the strings after just three hours’ sleep — pouncing shortly before the London stock exchange opened at 8am yesterday.
His first move under the plan, put together overnight by Treasury officials and bank chiefs over a takeaway curry at Whitehall, was to offer £50BILLION of taxpayers’ cash to boost the capital of certain banks.
This would effectively result in the part-nationalisation of those who took up the offer.
Another £200BILLION in cash was ploughed into the banking system to keep the industry afloat.
And £250BILLION more was put up to underwrite the banks’ debts.
Meanwhile the Chancellor organised the biggest single interest rate cut for seven years — reducing the level from five per cent to 4.5.
America, the EU, China, Switzerland and Canada also cut rates.
UK banks immediately reduced their mortgage costs — bringing joy to millions of home-owners.
Lenders Halifax, Woolwich and Lloyds TSB-owned Cheltenham & Gloucester were among those who moved quickly to pass on the cut.
Meanwhile the PM warned City fatcats of curbs on juicy bonus cheques. And he vowed Britain’s four million small and medium-sized firms with government contracts will have their invoices paid within ten days to ease their pain.
The action was taken to break the log-jam in the banking world.
Banks are refusing to lend to each other due to fears over “toxic” debts. So businesses are finding it impossible to borrow and the global economy is at risk of grinding to a halt.
Bankers welcomed the sensational bail-out, although the London stock exchange closed five per cent down by the end of the day.
US stocks also fell for a sixth straight session, with the Dow Jones industrial average ending down 2 per cent.
Gamble ... Gordon Brown and Alistair Darling at press conference yesterday to explain the £500billion mega-deal
Enlarge
The dramatic rescue bid sent Mr Brown’s reputation soaring within his warring Labour Party.
The Bank of England caught the market by surprise as it announced the rate cut at midday. It was not due to act until today. The reduction should slash £47 off monthly repayments on a £150,000 mortgage.
The PM detailed the action as he faced his first Commons questions since the start of the summer holidays. Ministers are gambling that part-nationalising the banks could earn taxpayers a windfall over time.
If the rescue plan succeeds, the banks will pay dividends to shareholders, including the Government.
That will help ease government debt heading towards £100billion.
The Treasury forecast borrowing of £43billion this year — but it will come in at more than TWICE that.
Mr Darling declared: “If we didn’t do anything there would be a very significant cost to all of us.” The PM and Chancellor refused to say taxes will eventually rise to pay for the move.
Mr Brown said: “Extraordinary times call for bold solutions. This is not a time for conventional thinking, but for fresh and innovative intervention that gets to the heart of the problem.”
Mr Brown spoke by phone to French President Nicolas Sarkozy, German Chancellor Angela Merkel and Italian PM Silvio Berlusconi, as well as Jose Manuel Barroso, President of the European Commission.
Yet even as the deal was unveiled, warnings came of a big slump ahead.
The International Monetary Fund declared Europe and America are on the brink of recession. It said Britain’s economy will contract by 0.1 per cent next year, with jobless levels rising from 5.4 per cent to six.
But it forecast Britain will bounce back in 2010, election year, with a 2.2 per cent rate of growth.
US Treasury Secretary Hank Paulson said the turmoil “will not end quickly”. He added: “Significant challenges remain ahead.”
Elsewhere, global recession fears sent oil prices to their lowest level in almost a year. Light crude dipped as low as $86.05 a barrel amid fears the credit crisis would weaken demand.
Brighter outlook
By IAN KING
Business Editor
THE co-ordinated interest rate cut is great news.
The US Federal Reserve, European Central Bank and Bank of England have acted decisively to react to the paralysis which was starting to infect world markets.
They have recognised that inflation — the main reason they did not cut rates sooner — now poses less of a threat than recession.
Many will wonder if the cut will be passed on to consumers. Don’t worry — it will.
The other big event yesterday was the £500billion rescue package for the financial system — and the Government is not likely to have staked so much without securing significant concessions.
Underpinning the package was the demand that banks renew lending to each other and customers. So stand by for cheaper mortgages.
Will the package work? There’s every chance.
The £250billion guarantee on short-term loans issued by the banks should go a long way towards unfurring the arteries of the UK financial system.
Gordon is stronger
By GEORGE PASCOE-WATSON
Political Editor
DAVID Cameron won’t be celebrating his 42nd birthday with champagne today.
Gordon Brown’s rescue plan may not save the banking industry. But for the time being it has rescued his position as Labour leader.
The PM’s poll ratings are rising and he commanded the Commons with authority yesterday.
Labour MPs cheered him to the rafters, yet Mr Brown is not out of the woods.
Families are about to suffer like they rarely have before.
Winter fuel bills will be sky high. Massive increases in gas and electricity charges will make it even harder to meet mortgage repayments.
The New Year is certain to bring thousands of job losses.
Firms which can’t borrow will go to the wall.
Borrowing of up to £100billion and more will mean higher taxes or cuts in public services — or both.
Job losses will mean huge welfare bills. The downturn will drastically reduce taxes going into the Treasury.
The PM may yet pay the price at the polls for the crash and the slump to follow.
thesun.co.uk
The Sun, as only a British newspaper can, dubbed it "Thundersplurge is go! International rescue!"
The IMF has also forecast that the British economy - which has gone longer than any other G8 country since it last had a recession - will bounce back and predicted it will grow 2.2% in 2010.
Frozen markets refuse to thaw
Rescue plan ... Chancellor Alistair Darling and PM Gordon Brown at Number 10 yesterday
By Staff Reporter
The Sun
9th October 2008
Go to The Sun's website, here - http://www.thesun.co.uk/sol/homepage/news/money/article1785808.ece to see Chancellor Alistair as a Thunderbirds puppet!
THUNDERBIRDS lookalike Alistair Darling's international rescue effort showed no sign of kick-starting money markets today.
Despite the bushy-eyebrowed Chancellor's dramatic salvage bid, the rate at which banks lend to each other got bigger.
Figures showed the three month rate - a key measure for mortgage costs - widened to 6.28 per cent from 6.27 per cent.
This puts it almost two per cent above the Bank of England’s 4.5 per cent base rate after yesterday’s shock half-point cut.
Investec economist Philip Shaw said the quarterly lending rate was “disappointingly high”.
Rescue
New figures also showed British homes have plummeted in value to pile on the misery for property owners.
Nearly £26,500 was wiped off the average house price, the UK’s largest mortgage lender Halifax said.
Britain has suffered it's biggest ever house price drop over the last year.
Prices dived more than 13 per cent in September, the biggest fall ever recorded by the bank's house price index.
The rate of decline was worse than feared. The average UK home now costs £172,108, around the same level as in January 2006.
But banking shares have been boosted by the resuce package today.
HBOS shot up 16 per cent and Royal Bank of Scotland rocketed by 19 per cent after the FTSE index opened this morning.
The market was up 1.5 per cent after interest rate cuts across the world fuelled a recovery.
Darling teamed up with American and European finance chiefs yesterday to try to stave off a global slump.
Darling’s staggering £500billion injection to bail-out Britain’s banks is equal to a £20,000 bill for every single taxpayer.
The Chancellor and Prime Minister Gordon Brown gambled everything on a scheme to save the banks and prevent a recession.
Mr Darling began pulling the strings after just three hours’ sleep — pouncing shortly before the London stock exchange opened at 8am yesterday.
His first move under the plan, put together overnight by Treasury officials and bank chiefs over a takeaway curry at Whitehall, was to offer £50BILLION of taxpayers’ cash to boost the capital of certain banks.
This would effectively result in the part-nationalisation of those who took up the offer.
Another £200BILLION in cash was ploughed into the banking system to keep the industry afloat.
And £250BILLION more was put up to underwrite the banks’ debts.
Meanwhile the Chancellor organised the biggest single interest rate cut for seven years — reducing the level from five per cent to 4.5.
America, the EU, China, Switzerland and Canada also cut rates.
UK banks immediately reduced their mortgage costs — bringing joy to millions of home-owners.
Lenders Halifax, Woolwich and Lloyds TSB-owned Cheltenham & Gloucester were among those who moved quickly to pass on the cut.
Meanwhile the PM warned City fatcats of curbs on juicy bonus cheques. And he vowed Britain’s four million small and medium-sized firms with government contracts will have their invoices paid within ten days to ease their pain.
The action was taken to break the log-jam in the banking world.
Banks are refusing to lend to each other due to fears over “toxic” debts. So businesses are finding it impossible to borrow and the global economy is at risk of grinding to a halt.
Bankers welcomed the sensational bail-out, although the London stock exchange closed five per cent down by the end of the day.
US stocks also fell for a sixth straight session, with the Dow Jones industrial average ending down 2 per cent.
Gamble ... Gordon Brown and Alistair Darling at press conference yesterday to explain the £500billion mega-deal
Enlarge
The dramatic rescue bid sent Mr Brown’s reputation soaring within his warring Labour Party.
The Bank of England caught the market by surprise as it announced the rate cut at midday. It was not due to act until today. The reduction should slash £47 off monthly repayments on a £150,000 mortgage.
The PM detailed the action as he faced his first Commons questions since the start of the summer holidays. Ministers are gambling that part-nationalising the banks could earn taxpayers a windfall over time.
If the rescue plan succeeds, the banks will pay dividends to shareholders, including the Government.
That will help ease government debt heading towards £100billion.
The Treasury forecast borrowing of £43billion this year — but it will come in at more than TWICE that.
Mr Darling declared: “If we didn’t do anything there would be a very significant cost to all of us.” The PM and Chancellor refused to say taxes will eventually rise to pay for the move.
Mr Brown said: “Extraordinary times call for bold solutions. This is not a time for conventional thinking, but for fresh and innovative intervention that gets to the heart of the problem.”
Mr Brown spoke by phone to French President Nicolas Sarkozy, German Chancellor Angela Merkel and Italian PM Silvio Berlusconi, as well as Jose Manuel Barroso, President of the European Commission.
Yet even as the deal was unveiled, warnings came of a big slump ahead.
The International Monetary Fund declared Europe and America are on the brink of recession. It said Britain’s economy will contract by 0.1 per cent next year, with jobless levels rising from 5.4 per cent to six.
But it forecast Britain will bounce back in 2010, election year, with a 2.2 per cent rate of growth.
US Treasury Secretary Hank Paulson said the turmoil “will not end quickly”. He added: “Significant challenges remain ahead.”
Elsewhere, global recession fears sent oil prices to their lowest level in almost a year. Light crude dipped as low as $86.05 a barrel amid fears the credit crisis would weaken demand.
Brighter outlook
By IAN KING
Business Editor
THE co-ordinated interest rate cut is great news.
The US Federal Reserve, European Central Bank and Bank of England have acted decisively to react to the paralysis which was starting to infect world markets.
They have recognised that inflation — the main reason they did not cut rates sooner — now poses less of a threat than recession.
Many will wonder if the cut will be passed on to consumers. Don’t worry — it will.
The other big event yesterday was the £500billion rescue package for the financial system — and the Government is not likely to have staked so much without securing significant concessions.
Underpinning the package was the demand that banks renew lending to each other and customers. So stand by for cheaper mortgages.
Will the package work? There’s every chance.
The £250billion guarantee on short-term loans issued by the banks should go a long way towards unfurring the arteries of the UK financial system.
Gordon is stronger
By GEORGE PASCOE-WATSON
Political Editor
DAVID Cameron won’t be celebrating his 42nd birthday with champagne today.
Gordon Brown’s rescue plan may not save the banking industry. But for the time being it has rescued his position as Labour leader.
The PM’s poll ratings are rising and he commanded the Commons with authority yesterday.
Labour MPs cheered him to the rafters, yet Mr Brown is not out of the woods.
Families are about to suffer like they rarely have before.
Winter fuel bills will be sky high. Massive increases in gas and electricity charges will make it even harder to meet mortgage repayments.
The New Year is certain to bring thousands of job losses.
Firms which can’t borrow will go to the wall.
Borrowing of up to £100billion and more will mean higher taxes or cuts in public services — or both.
Job losses will mean huge welfare bills. The downturn will drastically reduce taxes going into the Treasury.
The PM may yet pay the price at the polls for the crash and the slump to follow.
thesun.co.uk