On Monday the British government unveiled the details of its plan to inject £37bn worth of capital into three high-street banks. The Royal Banks of Scotland (RBS) received £20bn to raise its capital, whilst Lloyds TSB and HBOS would get the remaining £17bn. The cash injection is part of the government scheme to stabilise the UK’s banking system.
The partial nationalisation of the banks practically means that the tax-payers become 60% shareholders in RBS and 40% in Lloyds TSB and HBOS. The merger of the latter two banks would go ahead, but the terms have been re-negotiated. Gordon Brown, the UK Prime Minister, said that the government would wish to sell its shares once confidence had been restored in the market and the banking system had been stabilised. In return for the investment, the government will have a say in the management of the banks with a particular focus on the management bonus schemes.
The Office for National Statistics (ONS) published its unemployment figures this week, which shows a 164,000 rise, the worst in the past 17 years. Current unemployment is up from 5.2% to 5.7%. In response to the rise, the government announced an extra £100m available for re-training workers.
Whilst the financial system is tumbling, the economy is heading towards a full-scale recession and unemployment is growing, inflation seems to have peaked. It is a natural side-effect of recession that prices are pulled down. The inflation, nevertheless, remains high at 5.2%, which is partly due to a 50% rise in the price of gas and a 30% increase in that of electricity. Food inflation seems to decrease, which was said to have been caused by high oil prices. The price of oil peaked at $140 a barrel and is back to $80 now.
There is not much to cheer about regarding the economy, but not all is gloom and doom. There is hope that with national governments and central banks now acting jointly, the recession will be shorter-lived than predicted.
Vocabulary
- gloom and doom – lehangoló és borús
- unprecedented – példanélküli
- to unveil – leleplez
- high-street bank – a legnagyobb kereskedelmi bankok
- shareholder – részvényes
- to re-negotiate – újra tárgyal
- confidence – bizalom
- to re-train – átképez
- full-scale – teljes mértékű
- side-effect – mellékhatás
- to peak – eléri a csúcsot
- barrel – hordó
- to predict – számit
