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UK bank savings guarantee urged UK bank savings guarantee urged
(30 minutes later)
UK Chancellor Alistair Darling is coming under pressure to follow Germany and guarantee private bank savings to ward off financial crisis.UK Chancellor Alistair Darling is coming under pressure to follow Germany and guarantee private bank savings to ward off financial crisis.
Lib Dem leader Nick Clegg said it was "completely unavoidable" after Germany became the third European country to instigate the measure.Lib Dem leader Nick Clegg said it was "completely unavoidable" after Germany became the third European country to instigate the measure.
Greece and Ireland have already announced similar commitments.Greece and Ireland have already announced similar commitments.
BBC business editor Robert Peston said he would be "immensely surprised" if Britain did not follow within 24 hours. But the BBC business editor Robert Peston said there is confusion over the specific details of Germany's plan.
He said it would be "extremely difficult" for the UK not to follow Germany's lead - particularly after recent promises by Europe's leading economies to work together to tackle the financial crisis. He said should German Chancellor Angela Merkel be offering to underwrite the retail liabilities of German banks, it would reverberate all over Europe.
He added that without an offer of such an agreement of a 100% guarantee confidence could ebb away from the British banking system. He added in such a situation the UK would be expected to make a similar guarantee.
The Chancellor of the Exchequer Alistair Darling has repeatedly pledged that he will do "whatever is necessary" to maintain stability in the British financial system.The Chancellor of the Exchequer Alistair Darling has repeatedly pledged that he will do "whatever is necessary" to maintain stability in the British financial system.
Last week, the Financial Services Authority said it would be raising the limit to the amount of deposits that are guaranteed should a UK bank go bust, from £35,000 to £50,000 per banking group from this Tuesday.Last week, the Financial Services Authority said it would be raising the limit to the amount of deposits that are guaranteed should a UK bank go bust, from £35,000 to £50,000 per banking group from this Tuesday.
Paris meetingParis meeting
Mr Clegg said Mr Darling is under mounting pressure to take further steps: "Germany is Europe's economic superpower. Where it leads, others are bound to follow."Mr Clegg said Mr Darling is under mounting pressure to take further steps: "Germany is Europe's economic superpower. Where it leads, others are bound to follow."
That Germany is the first of the major European economies to provide 100% insurance to private savers shows just how fragile its banks have become Robert PestonBBC business editor href="http://www.bbc.co.uk/blogs/thereporters/robertpeston/2008/10/full_deposit_protection_is_nig.html">Peston's view: Full protection nighSend us your commentsNo business rush to Irish banks That Germany is the first of the major European economies to provide 100% insurance to private savers shows just how fragile its banks have become Robert PestonBBC business editor href="http://www.bbc.co.uk/blogs/thereporters/robertpeston/2008/10/german_guarantee_lost_in_trans.html">Peston's view: Full protection nighSend us your commentsNo business rush to Irish banks
He added: "Ireland's action last week to guarantee all deposits made a common European approach to deposit guarantees necessary.He added: "Ireland's action last week to guarantee all deposits made a common European approach to deposit guarantees necessary.
"Germany's decision makes it completely unavoidable.""Germany's decision makes it completely unavoidable."
The Lib Dems Treasury spokesman, Vince Cable, told the BBC the UK was likely to follow Germany's lead.The Lib Dems Treasury spokesman, Vince Cable, told the BBC the UK was likely to follow Germany's lead.
But he said such action would be "irrational" as 98% of depositors had less than £50,000 in savings in any one institution and would not be affected.But he said such action would be "irrational" as 98% of depositors had less than £50,000 in savings in any one institution and would not be affected.
He said: "People are anxious, there is a danger that if one country, a major country like Germany offers blanket protection and others don't, you then get an out flow, so the British government will almost certainly have to follow suit. "He said: "People are anxious, there is a danger that if one country, a major country like Germany offers blanket protection and others don't, you then get an out flow, so the British government will almost certainly have to follow suit. "
Analysts believe Ms Merkel was forced into further action as the future of its second-largest mortgage lender Hypo Real Estate was found to be teetering on the brink of bankruptcy.Analysts believe Ms Merkel was forced into further action as the future of its second-largest mortgage lender Hypo Real Estate was found to be teetering on the brink of bankruptcy.
Leaders of the major European economies met in Paris on Saturday for talks to hammer out measures to halt the global credit crunch.Leaders of the major European economies met in Paris on Saturday for talks to hammer out measures to halt the global credit crunch.
Britain, Germany, Italy and France agreed to work together to support financial institutions and bring in more regulation.Britain, Germany, Italy and France agreed to work together to support financial institutions and bring in more regulation.