By Business Editor Amy Bould and John Hipwood
London’s stock exchange plummeted today as world markets reacted to uncertainty over the global banking crisis.
The FTSE was down 239.7 at 1.30pm as Prime Minister Gordon Brown came under intense pressure to match the offer of his German counterpart, Angela Merkel, by pledging to guarantee all private savings accounts.
- The Shropshire Star has been asking readers how concerned they are about the current financial climate.
- See Monday’s two-page special.
The German Chancellor gave a verbal guarantee that savers’ deposits in German banks would be protected, but it appeared today that this would not be backed up by specific legislation.
The Prime Minister spoke to France’s President Nicolas Sarkozy this morning and was due to talk to Miss Merkel later today in a bid to ensure that countries, including Germany, don’t follow the Greek and Irish government in giving a blanket guarantee which could see savers start switching their money from one country to another.
Mr Brown’s official spokesman said: “Our understanding is that the German government will not be bringing through legislation for legally binding guarantees on bank deposits. Clearly it’s a fast-moving situation.”
Chancellor Alistair Darling was making a statement to MPs returning to Westminster after the summer recess this afternoon in which he was expected to bring MPs up to date with the Government’s latest thinking.
The Treasury repeated that it was prepared do “whatever is necessary” to shore up the British banking system as Mr Brown chaired the first meeting of the newly formed National Economic Council.
Banking stocks were the worst hit on the FTSE as Halifax Bank of Scotland lost gains seen at the end of last week, while Royal Bank of Scotland was also more than 10 per cent lower in the first hour of trading.
The falls, which caused the FTSE 100 Index to slide 241.05 to 4739.20 within an hour of trading, also saw Prudential, Norwich Union owner Aviva and Lloyds TSB losing value.
The latest sign of the worsening effect of the credit crunch was seen in figures on new car sales, with even the arrival of new number plate vehicles failing to kick-start the new car market.
The number of new cars sold last month plunged by 21.2 per cent despite the introduction of new number plates last month.
The Society of Motor Manufacturers and Traders said demand for new cars had now fallen for the fifth consecutive month.
September new car registrations usually account for at least 17 per cent of the annual total, so today’s figures are grim news for the industry, which has been hit by the economic slowdown.
One Comment
things are mighty serious, iceland is facing meltdown, the dow stock market has been suspended twice this afternoon, falling 9% in value. just as well we have some experience in our government and watching the chancellors statement to parliament it was pleasing to see george osborne, tory, and vince cable, lib dem, both offering their party’s help and support.