It is difficult to imagine the feelings of all the thousands of families who awoke on Friday morning to discover that their savings which they thought were in the safest possible place were perhaps not all that safe after all. Whilst the Bank of England and the management of Northern Rock sought to reassure savers I can understand why so many thought it best to move their hard earned savings to a new home. The reasons behind the bank’s problems are complex but I know from my on experience in the legal services sector that there are some lenders who have a reputation for lending to borrowers who would find it difficult to borrow normally or who have a reputation for lending amounts greater than the value of the underlying security.
The apparently buoyant economy that has seen Labour win three consecutive elections has been built on borrowed money. The Government borrows; individuals borrow. Eventually the day arrives when it is time to start repaying those borrowings. Gordon Brown has repeated many times there must be no return to boom and bust……..Hmmm!
I hope for the sake of all the individuals and families who have large borrowings that there is no bust.
I went to a whiskey tasting evening on Friday and yesterday was out delivering leaflets and chatting to residents.