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'Run on UK' sees foreign investors pull $1 trillion out of the City
Key Excerpts from Article on Website of The Independent (One of the U.K.'s leading newspapers)
Posted: March 21st, 2009
http://www.independent.co.uk/news/business/news/run-on-uk-se...
A silent $1 trillion "Run on Britain" by foreign investors was revealed yesterday in the latest statistical releases from the Bank of England. The external liabilities of banks operating in the UK that is monies held in the UK on behalf of foreign investors fell by $1 trillion (700bn) between the spring and the end of 2008, representing a huge loss of funds and of confidence in the City of London. Some $597.5bn was lost to the banks in the last quarter of last year alone, after a ... massive $682.5bn haemorrhaged in the second quarter of 2008 a record. About 15 per cent of the monies held by foreigners in the UK were withdrawn over the period. This is by far the largest withdrawal of foreign funds from the UK in recent decades about 10 times what might flow out during a "normal" quarter. The revelation will fuel fears that the UK's reputation as a safe place to hold funds is being fatally compromised by the acute crisis in the banking system and a general trend to financial protectionism internationally. The slide in sterling it has shed a quarter of its value since mid-2007 has been both cause and effect of the run on London, seemingly becoming a self-fulfilling phenomenon. The danger is that the heavy depreciation of the pound could become a rout if confidence completely evaporates. Paranoia that the UK could follow Iceland into effective national insolvency and jibes about "Reykjavik on Thames" will find an unwelcome substantiation in these statistics.
Note: For many deep revelations of the realities of the world financial crisis from reliable sources, click here.
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