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Abstract

This case study was primarily written to raise a debate on whether the UK has lost another industry to the unwarranted market forces. Many argue that the UK had been losing its pre-eminence in one industry after another. Starting with the textile industry, many industries in the UK have lost their competitive edge. The US financial crisis (2008) along with the sub-prime crisis (2007) seemed to have delivered a severe blow to the UK's banking sector. In September 2007, Northern Rock sought liquidity support from the government, as it failed to raise capital in the open market. Consequently, Northern Rock was nationalised. Eventually, most of the top banks in Britain, like the Royal Bank of Scotland, that were solvent and well-capitalised suddenly collapsed in 2008. As the financial debacle was fast spreading across all the banks, the UK government adopted desperate measures to contain the crisis. On 21 April 2008, the Bank of England announced a £50 billion 'special liquidity scheme' that focused on the transfer of high-quality government debt for high-risk commercial bank mortgage debt. This amount was later increased to £200 billion. The government also guaranteed wholesale liabilities to the tune of £250 billion for a period of 6 months with a possible extension.
Location:
Industry:
Other setting(s):
2008

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Abstract

This case study was primarily written to raise a debate on whether the UK has lost another industry to the unwarranted market forces. Many argue that the UK had been losing its pre-eminence in one industry after another. Starting with the textile industry, many industries in the UK have lost their competitive edge. The US financial crisis (2008) along with the sub-prime crisis (2007) seemed to have delivered a severe blow to the UK's banking sector. In September 2007, Northern Rock sought liquidity support from the government, as it failed to raise capital in the open market. Consequently, Northern Rock was nationalised. Eventually, most of the top banks in Britain, like the Royal Bank of Scotland, that were solvent and well-capitalised suddenly collapsed in 2008. As the financial debacle was fast spreading across all the banks, the UK government adopted desperate measures to contain the crisis. On 21 April 2008, the Bank of England announced a £50 billion 'special liquidity scheme' that focused on the transfer of high-quality government debt for high-risk commercial bank mortgage debt. This amount was later increased to £200 billion. The government also guaranteed wholesale liabilities to the tune of £250 billion for a period of 6 months with a possible extension.

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Location:
Industry:
Other setting(s):
2008

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