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Context of 'February 7, 2008: Debts of Ailing British Bank Added to Government Accounts due to Bailout'

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Troubled British mortgage giant Northern Rock agrees to sell £2.2 billion (about $4.4 billion) of its mortgage assets to US investment bank JP Morgan. The assets represent about 2 percent of its mortgage portfolio and the price represents a 2.25 percent premium on the assets’ value. Northern Rock says it will use the funds to pay back some of the £25 billion ($50 billion) in emergency loans it has been given by the Bank of England to help it through the financial crisis. [BBC, 8/5/2008]

Entity Tags: JP Morgan Chase, Northern Rock plc

Timeline Tags: Global Economic Crises

The British Office for National Statistics decides that £100 billion (about $200 billion) of debt owed by ailing mortgage giant Northern Rock will appear on government accounts, because of the government’s bailout of the bank. The move means the government may be at risk of breaking its rule to keep net debt below 40 percent of national income. The office stresses that the statistical change to public status should not be confused with nationalization, although the bank will actually be nationalized within days. [Daily Telegraph, 2/26/2008; BBC, 8/5/2008]

Entity Tags: Office for National Statistics, Northern Rock plc

Timeline Tags: Global Economic Crises

The jobless rate in Britain climbs to its highest level since 1995, according to the Office of National Statistics in London. The number of people out of work hits 2.47 million, while unemployment claims rise to 1.61 million for the month of July. Data recently released by the statistics office indicate that unemployment through July rose to 7.9 percent, the most since 1996, compared to the European Union’s latest figure of 9.5 percent, 9.7 percent in the US, and 5.7 percent in Japan. Bank of England Governor Mervyn King says that even after the economy stops shrinking, households will continue feeling the recession’s pain, since “unemployment is either going to continue rising or remain high.” As much as £175 billion ($288 billion) is being printed to aid economic growth and avoid deflation. “If anything, the UK economy is only just emerging from recession, and this is a lagging indicator,” says economist Philip Shaw of London’s Investec Securities. “We’re looking at unemployment peaking towards the middle of next year. Things are likely to improve at a slow rate, but it’s likely to remain uncomfortable for a long time.” Employment minister Jim Knight tells BBC News: “Unemployment still remains a real problem for families up and down the country. We’ve got to keep the support going and not be tempted to celebrate the recovery.” In speaking on the recovery, Prime Minister Gordon Brown—up for re-election in 2010—says the economic rebound “is still fragile” and stimulus programs that boost the economy should be maintained. “There are no signs of recovery here,” Trades Union Congress General Secretary Brendan Barber says. “It might look rosier in city dealing rooms but, out in the real world, unemployment is the number one issue.” [Bloomberg, 9/16/2009]

Entity Tags: Investec Securities, Bank of England, Brendan Barber, European Union, Gordon Brown, United Kingdom, Office for National Statistics, Mervyn King, Jim Knight

Timeline Tags: Global Economic Crises

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