Banks look to beat the base rate
Nov 10th, 2008 by ctoop
News Week: 10th November 2008
With the banks fearing that interest rates from the Bank of England could be set at 0% resulting in no profit, many high street banks such as Halifax, Britain’s largest mortgage lender, have introduced small print into its loans to allow them to charge up to 3% higher in interest, than the base rate.
This would be counteracting what the Bank of England is trying to do, and would mean that the rate cut doesn’t benefit the taxpayer or those borrowing form the bank.
Nationwide Building society have predicted that house prices could continue to fall throughout 2009 and 2010. This means that the recession is going to get worse before it gets better, the high house prices were a contributing factor to this recession and so will be a key marker for the end of the recession.
Yet until house prices begin to rise again people will feel insecure in the financial markets. A vicious circle which will be hard to rectify but that is exactly what the government and banks are trying to do.
The current recession has now hit the education system as private schools are in danger of being closed or merged. Schools which charge fees are finding themselves having to throw out students as parents fail to pay the fees.
Unsurprising seeing as the cost of a private education has rise 40% in the last five years. Despite one of the strong pulls of private schools being the small class sizes, many schools are having to increase the size of their classes to save money and keep in business.
The Conservatives have unveiled new plans to create 350,000 new jobs by offering companies giving jobs to the currently unemployed a National Insurance break of £2,500. Although this will provide more employment it may not be the best way to save the country from the recession.
As this recession is caused by a low demand, cheaper labour will not sort out the financial situation. Instead money needs to go into the pockets of the low and middle income earners who are struggling with bills and living costs.
Morgan and Stanley are tipped to be downsizing its company so staff are bracing themselves for job cuts. It is thought that as many as 1 in 10 of its staff, from all departments, could be left unemployed.
Royal Bank of Scotland, despite being given a £20bn bailout by the taxpayer, is planning to spend £1m on staff parties this Christmas. The company’s executives have already enjoyed a £300,000 champagne party to celebrate their success, yet there is more lavish spending still to come on its employees.
This is how the taxpayer’s money that was intends to save the bank form financial ruin is being spent, on parties, when the people who are paying for it are struggling to make ends meet.
By Charlotte Toop
