Financial Crisis Impact on Uk Government - 3011 Words

ROLE OF THE GOVERNMENT The UK government has announced a package of measures aimed at rescuing banking system that makes 400 billion pound. 100 billion pound will be available in short term loans from bank of England on top of an existing loan facility. Banks will have to increases their capital by at least 25 billion pound and borrow from government. An additional 25 billion pound in extra capital will be available in exchange of preference shares. Government described as the root cause of current financial crisis is liquidity, capital and funding At least 200 billion pound will be made available from bank of England for short term borrowing to provide liquidity to banks Those banks who wished to strengthen capital ratios†¦show more content†¦Since the market began to tumble in 2008, Governments around the world have spent almost $ 11 trillion bailing out falling banks and trying to repair the financial system As per the IMF data all the governments of the world has so far spent more than $ 10.8 trillion to avoid the ill effects of last years financial crisis. Out of this huge sums are spent by the rich nations. [pic] Out of this the maximum amount is spent as guarantee given to save the existing banking system, which was effected by last year’s crisis. This crisis was worst than the great depression of 1929. US had spent $ 3.6 trillion to bailing out failing banks and repair the financial system. 25.8% of total GDP for bailing out ie 25.8% of the total GDP, which is $ 10,000/- per person. UK had spent $ 2.4 trillion as 94.4% of GDP for bailing out failing banks. ie 94.4% comes around $ 50,000/- per person. The private financial sectors also have estimated write-offs amounting to $ 4tn, of which two-third are losses suffered by big international banks such as Citigroup and RBS. About half of these losses write-offs of securities backed by failed mortgages. UK government has spent 94.4% of the GDP to bail out the banking system as follows: [pic] In-spite of this UK is not comes out the recession and the last quarter wasShow MoreRelatedBanking of Uk1564 Words   |  7 Pages1. The financial crisis of 2007/2008 and its impact on the UK and other economies Do you still feel vague about the causes and the effects of the financial crisis of 2007/8? 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