Northern Rock loan in 'desperate territory'

30 November 2007 14:45:29

Opposition MPs call for bank to be nationalised

Data from the Bank of England has indicated that the amount lent by the taxpayer to the stricken bank, Northern Rock, has soared to almost £30bn with a £2.7bn rise on the borrowed amount from last week. 

The private sector rescue deal offered by Sir Richard Branson’s Virgin Group earlier in the week has faced strong opposition from angry shareholders who believe the purchase would be at a knockdown price.

As a result, opposition MPs called for the Government to nationalise the bank based on the reasoning that if the country were to take over the bank it could prevent it borrowing more money which may potentially be unrecoverable.

Vince Cable, acting leader of the Liberal Democrats, said: “We are in desperate territory here as the amount of money being loaned to Northern Rock is increasing rather than decreasing. With the total now close to £30bn, the taxpayer cannot be expected to continue to dole out just vast sums of money on a weekly basis”.

Cable also said that by nationalising the bank, the government would be able to regain control of the situation and stop it spiralling out of control.

It is thought that the Bank has been forced to borrow this large sum of money because of the savers fleeing in the last two weeks. Since it was rescued by the Bank of England in September, the bank has lost £11bn of savings to rival institutions.

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