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Further help possible

The loans economy is struggling to drag itself out of it's largely self-created slump but after the intervention by the Government with Northern Rock, ministers are looking at additional ways in which they may be able to help the loans market recover more quickly and improve the overall economic outlook for the country. We are beginning to realise just how important a flourishing banking industry is to the UK, not only from an employment and financial perspective but also from the more subjective standpoint of overall confidence and the effect that has on other industries.

Put simply the main cause of all the troubles we are facing at the moment stems from easy access to loans in previous years, when lenders were happy to provide loans to people who really should not have been given them. This problem spread through the loans industry over a number of years before anyone realised just how big the issue was. When the penny finally dropped, instigated by a similar series of events in the US, the UK banking sector went into retreat, and loans that had been too widely available suddenly became increasingly rare. Companies invloved in lending are restricted in the type of products they can offer and several companies have stopped providing loans.

Northern Rock was one of the organisations that suddenly found itself in a very dangerous situation and the Government was faced with little of no option but to intervene and use it's own finances to shore up the bank. The downfall of the bank was seen by the Government as a not being an option due to the harmful effect that would have had on the rest of the banking sector.

The follow-on problems of lack of money for loans and mortgages, falling house prices and reductions in consumer spending are all contributing to the lack of financial confidence and actions by the Government without similar actions by the banks are likely to have only a small effect. Reducing or temporarily removing stamp duty from house purchases is one of the measures proposed but there are observers who say that the housing market should be left to correct itself with artificial influence.

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