Bailout Monday

Germany has put the cat amongst the pigeons and could well send the British Market into turmoil today by underwriting all private deposit accounts. On Radio 4’s Today programme, Yvette Cooper MP, the Treasury Secretary refused to dismiss the idea of widespread nationalisation of British banks.

Denmark and Austria have followed. This leaves the British government between and rock and a hard place for two reasons. If it does not take urgent action there will be an exodus of cash towards German banks as the German guarantee (unlike the Irish one) is perceived to be rock solid in global terms.

The second headache for Brown and Co is the price of underwriting deposits in the UK. Britain’s exposure would be in excess of £900billion over twice Ireland’s or Germany’s.

Many a banker or government Minister might be thinking the Boom Town Rats got it right.

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