£50 billion UK bailout for banks

Prime Minister Gordon Brown has called on the central bank in order to inject money into the financial system and provide 50 billion-pounds in order to save a failing system.

It is seen as an emergency action to stop the stock market fallout as the UK’s benchmark FTSE 100 Index closed 7.8 percent lower on Monday and follows the move of the US president with the $700 billion plan last week to help financial institutions.

Gordon Brown said today that the banking system ‘must be sounder’ and that is why they have stepped in and that they had to act quickly as Edinburgh-based bank RBS had its credit rating cut by Standard & Poor’s for the first time in 10 years.

Chancellor of the Exchequer Alistair Darling added that steps to partially nationalise the industry will provide the basic grounding for the provision of cash and investment and joins other European governments who have taken out guarantees.

This moves comes after the UK government took control of Northern Rock and Bradford & Bingley Plc and has looked over close mergers that have saved HBOS.

It is still estimated that 12,000 jobs will be lost and that the financial industry will continue to be hit hard by the current economic climate.

In the meantime, in a surprise announcement, the Bank of England has cut interest rates by half a point from 5% to 4.5%. Rates have remained at 5% since April in a bid to curb inflation.

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