Brace yourselves for another day of financial turmoil. At time of writing, the FTSE 100 share index has fallen by just under 6 percent; as has Germany’s DAX index. And all this despite the German finance ministry’s €50 billion rescue package for one of the country’s biggest banks, and Angela Merkel’s announcement that the government will ensure that all savings account deposits are “safe” (although it’s still unclear whether this will translate into an Irish-style savings guarantee).
The big question now is whether the UK government will also guarantee all deposits in this country. As numerous commentators have pointed out, there are various reasons against such a measure – the Damoclean sword it would place above the heads of UK taxpayers foremost among them. But the government may be forced into it anyway, to prevent UK companies and individuals transferring their assets to countries which do offer a full guarantee.
One thing’s for sure: there’s absolutely no room for dithering here – otherwise we might end up with the worst of all possible worlds, in which UK savings are transferred abroad and a massive burden gets placed on taxpayers’ shoulders.
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