Banks in the UK

Banks in the UK

Introduction

In UK banks are being urged to lend, especially to small businesses and for mortgages, but also they are being told to behave more responsibly than in the past and to build up their capital reserves. Thus, this is a difficult situation for the banks in United Kingdom. Therefore, the main purpose of this paper is to make an analysis on this dilemma and provide an overview on this situation. The paper presents the suggestions regarding the solutions which should be acceptable and favourable for the government and the banking sector.

Discussion

In United Kingdom, bans are being urged to make their investments in the business sectors in order to protect the economy of the country, and work for its recovery. This petition has been announced after the announcement of the figures of the final quarter of 2009 by Office for National Statistics (ONS). The report has shown the businesses in which investments are substantially falling. As per the figures mentioned by Office for National Statistics, from the previous quarters the rate of investment has decreased by 5.8 percent (Battellino, 2009). The business investment has also decreased by 24 percent as compared to the investments in the fourth quarter of 2008. This came out to be the worst scenario in the history. As per the Liberal Democrat shadow business secretary John Thurso, the main reason of this decrease in the investment is the failure of banks in making the lending; therefore, they are also failing to meet up their expectations of recovering the economy. It is necessary for the government to understand this situation and assure the increased bank's lending. It is necessary for the UK government to take necessary steps to increase the bank's lending agreements in such a way that its recovery should be confirmed (Blackert, 2008). As per the figures mentioned by the statistics, there is also a drop of 8.2 percent in the public and private sector manufacturing investments from the third quarter, and in the last year it has decreased by 35.3 percent.

In order to eliminate the credit squeeze, a complete plan has been developed by increasing the lending in United Kingdom. As per the Bank of England it is necessary for the city regulators that they should assure the banks that they will be granted the money in case of any need in the worsening conditions of euro zone crisis. As per the bank of England it is a very effective strategy which could help in bringing an enough amount of money which could be offered to the lenders, with estimated total amount of £500 billion in the Britain's banking system. As per the Governor of Bank of England Sir Mervtn King, we have made these strategies by making sure that the enough amount of money will be in hands of banks, and banks will be in position to endure the challenges which they are facing and the challenges which will the banks will be facing in future, so ...