Socialist Worker

Northern Rock keeps costing

Issue No. 2116

The debacle of the 'nationalisation' of the failed Northern Rock bank earlier this year looks likely to cost more than £1 billion of public money according to consultants at Goldman Sachs, which advised the government on the Northern Rock rescue plan.

Goldman Sachs originally estimated that the nationalisation would cost the government between £450 million (in the 'most optimistic scenario') and £1.28 million.

But this did not take into account falling house prices, which have hit Northern Rock's finances.

Northern Rock recently announced a £585 million loss for the first half of this year. The bank has paid off £9.4 billion of its Bank of England loan, but still owes £17.5 billion.

The government threw an extra £3 billion at the bank earlier this month to bail it out yet again.

While ordinary people are left to struggle with rising bills as a result of the economic crisis, the bankers know they can keep going back to the government to bail them out when it all goes wrong.

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Tue 26 Aug 2008, 20:58 BST
Issue No. 2116
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