Panic-stricken customers may damage the economy by Nina Gotzmannova

British economy is vulnerable, is liable to fear of customers and depends on US economy. This fact had shown after Northern Rock, currently the fifth largest mortgage lender in Britain, asked The Bank of England for emergency funds. Despite the funds in the bank are safe and secure, people chose to stand in queue and withdraw their money. After the crisis of subprime mortgage market in US in March this year, British financial and mortgage market remain unwarranted. Practices of mortgage providers offering loans up to one quarter higher than the property of the value were known in Britain too, and the possible collapse of banks or mortgage lenders terrified them. Northern Rock is not the only British bank asking for help. Anyway, it was the first one in 15 years. However, up to now the bank has not withdrawn any funds from the Bank of England. But who is withdrawing are the customers. Large queues filled main streets in British towns and panicking people don't hesitate to wait several hours to get their possessions. Since Friday an estimated £2 billion had been withdrawn. On 17 September it was announced that British government and the Bank of England will guarantee all existing deposits. This act can lead to decreasing on business confidence and for sure will lead to sale of the bank. Images of hundreds of people waiting in front of the bank has ruined and damaged the reputation of the bank and it has to be sold quickly. Also the crisis can close Britain economical growth, which was uninterrupted for the previous ten years. In the end, the gross domestic product can decrease up to 1 percent in 2008 and 2009.

related story: http://news.yahoo.com/s/ap/20070917/ap_on_bi_ge/britain_northern_rock;_ylt=AnzNqnH4UpTJG9aHxwRQ55qs0NUE

by Nina Gotzmannova for PocketNews (http://pocketnews.tv)

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