The UK government planned a bail-out scheme late last year. Such schemes give or loan businesses money to prevent them from becoming bankrupt or liquidated. The government does this so that the public’s everyday life can continue as always. This is just one of the reasons for such bail-outs, however. The transport industry is one that the government considers necessary to all and may receive help more frequently.

So now there is a possibility of a second bail-out. There are a few things it will affect:

The economy won’t be the same again

The government hopes the bail-out package will stabilise the economy, increase consumers’ confidence in the economy and entice the banks to lend more. Certain people from the financial industry have been asking for this type of help since early last year; others think this may be the wrong thing to do. They believe that the government should tackle the real problem – banks’ unwillingness to lend during a period of negative growth.

We’ll still feel the crunch

We’re all hoping that the bail-out will get banks to feel more optimistic and lend to consumers again. The Council of Mortgage Lenders feels hopeful about the bail-out. Others are not as optimistic and predict more nationalisation of banks before the economy gets better.


Savings rates may stay as they are for now; however, the potential of lowering rates is there. This would be to counter the savings rates that have been kept high for too long.

Northern Rock

The bank was nationalised in 2008 and they were hoping to reduce the amount of loans by 60%. Other plans included fewer new loans and encouraging mortgage customers to switch their mortgages to other lenders after the fixed introductory period expires.

Northern Rock had a referral deal with Lloyds TSB and gave borrowers access to brokers who could help with remortgages at other institutions. All these measures were part of their agreement with the government.

Royal Bank of Scotland

The government now owns 70% of RBS. Their deal with the government is to increase the amount of mortgages and loans to businesses. The goal is to increase its current lending by more than £6 billion.

Your mortgage may become cheaper now, and people who do not have access to a large deposit may find it easier to get a mortgage.