Britannia Radio

SCOTSMAN      25.2.09
Brown branded a 'headless chicken' over bank bail-out

By Gerri Peev

THE Prime Minister has been accused of behaving like a "headless 
chicken" after it emerged the government was giving Lloyds Banking 
Group a £480 billion discount on loan interest.

Alistair Darling, the Chancellor, will relinquish the government's £4 
billion preference shares in the bank - which carry a hefty 12 per 
cent dividend burden - for ordinary shares.

The taxpayer bail-out will probably be announced tomorrow, alongside 
a further £500 million bail-out for Lloyds and the Royal Bank of 
Scotland as part of the asset protection scheme.

George Osborne, the shadow chancellor, said the government showed a 
lack of direction over how to handle the economic crisis.

"Britain's recession is made worse by the fact that there is no 
coherent government plan, no clear sense of direction and no 
confidence in a Prime Minister who is behaving with the frenzy of a 
headless chicken."

A Treasury spokesman said discussions were still continuing with the 
banks and details had yet to be finalised. An announcement was due by 
the end of the month, he confirmed.
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DAILY MAIL    25.2.09
Savers withdraw £2.28billion in a ONE MONTH as low interest rates and 
recession bites
By SAM FLEMING

Families drained a record amount of savings from their bank accounts 
last month, worrying figures revealed.

Households withdrew nearly £75 million a day as they desperately 
struggle to stay afloat amid low interest rates and job losses.

Over the course of the month an extraordinary £2.28 billion was 
pulled out of personal accounts.

It was the highest figure since the British Bankers' Association 
started collating figures over a decade ago.

Experts said the figures reflect the painful effects of Britain's 
economic crisis on people's incomes.

With unemployment rising and falling interest rates, elderly savers 
in particular are being forced to run down their bank balances in 
order to keep up with monthly bills and debt repayments.

In addition, many individuals are losing faith in traditional High 
Street banks.
This is prompting them to move their money to other institutions, 
including National Savings & Investments and building societies.

The Bank of England has reduced its official rate to 1 per cent from 
5.25 per cent this time last year.

Banks have been quick to pass these reductions on to savers, who have 
emerged as the 'silent victims' of the credit crisis.

Some have to put up with deposit rates as low as 0.1 per cent.

Michelle Slade, of financial information firm Moneyfacts, said: 
'Savers who historically have been prudent with their money are 
starting to wonder if it is all worth it, as they continue to receive 
the lowest rates ever seen.

'Many are now choosing to spend the money rather than save, while 
increasing unemployment means many others are having to dip into 
their nest egg just to get by.'

Accounts that require no notice for savings to be withdrawn now pay 
rates of just 0.99 per cent on average, compared with 4 per cent this 
time last year, according to Moneyfacts.

Accounts that require notice pay a mere 1.28 per cent, compared with 
4.5 per cent in early 2008.

Jonathan Loynes, of Capital Economics, said: 'People just don't have 
the money to put aside at the moment.
'There are concerns about job security, constraints on income, and 
although inflation is coming down people are still being squeezed by 
higher prices over the past year.
'So they may feel the need to put aside more savings at the moment, 
but it is possible they just don't have the resources to do it.'

David Dooks of the BBA said: said the figures suggest people are 
focusing on paying down their debts as fears about the steep downturn 
intensify. Many will be dipping into savings accounts to do so.

'People have an aversion to taking on more debt on cards and personal 
loans,' he said. 'This is the largest monthly fall in deposits that 
we have seen. Whether it is the emergence of a trend time will tell.'

Customers paid back a net £100 million of overdrafts and personal 
loans during the month. And while they borrowed £300 million on their 
credit cards, that came after a net repayment of £200 million the 
previous month.

The BBA figures also showed that mortgage market remains moribund as 
property prices continue to fall. Mortgage approvals fell 43 per cent 
from a year ago in January to 23,376. That represents a modest 
recovery from the 22,416 home loans granted in December.