The flight to safety
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I wonder whether we are seeing the beginnings of a process that will lead to the large-scale nationalisation of the UK banking sector…
The tensions are beginning to mount following the Irish government’s decision to guarantee bank deposits in certain Irish banks.
Here in the UK, Northern Rock (already nationalised) has been forced to pull six of its most popular savings products, because they are proving too popular with its customers.
Quite simply, depositors are moving their savings to safe havens - starting the process of a rapid and massive shift in liquid assets from the private banks to nationalised (or government-backed) institutions. The process starts with consumer or household savings, but it will get serious once corporates start moving their funds too. Like many small businesses, I’m now looking at where we keep our cash balances - is the bank we are with safe?
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