Brown could dole out billions more to banks

Prime Minister, Gordon Brown, and chancellor, Alistair Darling, have recently indicated that whilst it is not being considered as a main option there is a chance that they may consider ploughing billions of pounds more into the banking system from the public purse. The government has already ploughed £37 billion of taxpayer’s money into banks last year, and may end up putting billions more in.

Mr Brown said that the previous cash injection given to banks had been primarily to save the banking system from collapse. He stated: ‘I don’t think you can judge the success of recapitalisation by what happened in one month. I think you’ve got to judge it as a necessary means in which by saving the banks – and saving is the right word – we restore the ability for them to fund businesses and mortgages, and that will happen over the next period of time.’

The Shadow Chancellor, George Osborne, stated: ‘If the Government has to revisit bank recapitalisation then it will be a stunning admission that their whole approach to the recession isn’t working. Gordon Brown’s recession policies are becoming an expensive failure.’ Vince Cable from the Liberal Democrats added: ‘We cannot have a situation where the taxpayer makes open ended financial commitments to the banking system when the banks then wilfully put their own short-term self interests ahead of the national economy.’

However, Alistair Darling stated: ‘When I announced our original plans in October, I said it would be necessary for us to continue to take whatever measures were necessary to ensure that we get lending in the system.’