Or will it remain an isolated example?
Today’s main story comes not from politics but from economics, where it has been announced that the Northern Rock building society has received emergency financial assistance from the Bank of England.
In a very rare move, the Bank will become the “lender of last resort” to Northern Rock, after consulting the Treasury and the Financial Services Authority. The money lent will be substantially above base rate, and Treasury Select Committee chairman John McFall commented that management at the firm were not without blame.
The markets, and the banking sector in particular, will be bracing themselves today, and indeed Northern Rock shares have already plunged 21% in early trading. Will Northern Rock be the first domino to fall, with others to follow and a very severe financial crisis looming, or an isolated case that can be contained?
Paul Maggs “Double Carpet”
Mike Smithson returns on 17th September
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