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More Downgrades

Moody’s ratings agency has downgraded the credit ratings of 12 UK banks and nine Portuguese banks. The UK banks include Lloyds TSB, RBS, Nationwide and Santander UK, and Moody’s said that the downgrade has been made as it no longer believed that the UK government was likely to support the firms if they got into trouble.

News I didn’t touch on yesterday was that the Bank of England has authorised the injection of a further £75 billion into the UK economy through quantitative easing (through buying assets such as government bonds, in an attempt to boost lending by commercial banks).

Bank of England Governor Mervyn King said, “This is the most serious financial crisis we’ve seen since the 1930s, if not ever. We’re having to deal with very unusual circumstances and to act calmly and do the right thing. The right thing at present is to create some more money to inject into the economy.” He also said that the amount of money in the economy was not growing quickly enough and he could not rule out another round of QE.

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