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Imf Puts Uk Banking Bail-outs At £1,227bn

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The total amount of support handed to Britain's financial sector by the taxpayer and the Bank of England now exceeds £1.2 trillion and is bigger than for any other major economy.

Fresh calculations from the International Monetary Fund have revealed the full scale of assistance meted out to Britain's collapsed banking system. The Fund said that when one combines all the support for banks, including capital injections, the buying of frozen assets, Government guarantees and Bank of England liquidity provision, the total bill amounts to 81.8pc of gross domestic product – equivalent to £1,227bn.

Although parts of this total are not strictly comparable since they incorporate amounts handed over in guarantees that are unlikely to be taken up, the figures will raise further concerns over the scale of the crisis and the impact it is already having on the UK's economic stability.

However, the calculations coincided with news that Fitch, one of the three major ratings agencies, had reaffirmed its AAA rating for the UK and given it a stable outlook. In May, Standard & Poor's warned of the possibility that it may downgrade the UK's rating, raising the prospect of an exodus of investors from sterling and the UK.

The IMF figures also came as the FTSE 100 brought to an end its biggest monthly gain in six years. The index dropped 23.25 points to 4608.36, but was up 8.5pc compared with the start of the month. The last time it achieved such significant gains were in the weeks following the fall of Baghdad in 2003.

In its report, the IMF, which has repeatedly warned Britain over the size of its deficit, said that as a result of the global recession, Britain faces the biggest projected budget deficit of any G20 country, amounting to 13.3pc of GDP in 2010, compared with a deficit of 9.7pc in the US.

However, the scale of the support for Britain's financial system will attract as much attention – particularly since it comes as the major banks prepare to update the market on their profits next week. The Fund said that in the UK the support was divided between capital injections, comprising 3.9pc of GDP (£58.5bn), purchases of assets and lending by the Treasury, comprising 13.8pc of GDP (£207bn), guarantees, making up 49.7pc of GDP (£745.5bn), and central bank liquidity support of 14.4pc of GDP (£216bn).

Britain's total tally accounts for a fifth of the amount rich countries have spent supporting their financial systems, the total for which now amounts to $9.2 trillion (£5.5 trillion), according to the IMF research. The Fund said that although Governments would be likely to recover the initial outlay, they would still rack up large deficits in the coming years due to the economic repercussions.

George Osborne, the shadow chancellor, said: "It's official – the debt crisis is worse in Britain than any other major economy. The IMF today says Britain's budget deficit next year will be bigger than anyone else's, and that our national debt has grown proportionately faster than anyone. We now face a 100pc national debt and the humiliation of the first ever downgrade in Britain's credit rating, with all the higher debt costs that entails. Gordon Brown's denial of the truth about the debt crisis and the need to cut spending whoever wins the election is doing serious economic damage to Britain's recovery."

As well as affirming the UK's credit rating, Fitch said it expected the eventual cost of the financial sector bail-out to fall from an initial outlay of £145bn to £40bn, as banks recovered and the Exchequer reclaims the proceeds.

So one fifth of the banking bailout money is purely for the UK, thank god we are so wealthy in debt.

Fitch are on the ball again they are correct we are stable alright, stable in the sh1t.

Thank god the stock markets aren't worried about debt, just think what share prices would be doing if any of this was relevant to the wider economy.

Thank god we have a PM who can see through irrelevance that is debt and just gets on with spending other peoples money. How can there be a debt crisis when debt is wealth. Only a truly rich nation could underwrite the banking system like we have.

The only way is up from here.

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so much for 50bn being the sum of the purchases for "troubled" assets.

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Still, that big pile of debt to keep the GDP figures looking good in the short term. Who cares about the long term eh? :rolleyes:

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Come on, it's only a trillion.



all sounds trivial.

chicken feed almost.

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