The financial institutions in the United Kingdom are still to recover from the financial doldrums
. These banks could need another government-backed bail-out package to stay afloat in 2011, an economic think-tank has found. The government is expected to withdraw state funding projects which will have adverse effects on the bank.
The New Economics Foundation (NEF) has released a new report which claims banks will need to borrow 25 billion a month next year following the withdrawal of state funding packages. It is much higher than the current level of 12 billion. This might create a further uproar in the United Kingdom as the masses have been at the receiving end due to the failures of the banks. Recently there were reports that some of the banks were planning to start back their banker bonuses.
According to the study, the government will have to bail out high street banks in order to plug this funding hole which is expected to be around 750 billion. The banks are very much unlikely to come out of the crisis themselves and will have to look at the government to bail them out. It will be the second time in two years that the banks will be looking for a bailout.
"The public have already paid for the failure of the banks twice, first by bailing them out, and then by suffering a program of drastic cuts to public services," Tony Greenham at the NEF said. "We need urgent reform of the banking system to ensure the bailed-out banks are not allowed to repeat their failures."
The Where Did Our Money Go? report revealed that banks already borrow around 12 billion a month, while it also lamented the lack of information over where firms have spent the previous 1.2 trillion bail-out package. There are some optimists in the banking community which feel that such a bailout may not be required by the banks