Britain Announces Emergency Measures to Insulate Financial System From Euro Crisis
Britain unveiled extraordinary plans Thursday to inject billions of dollars of cash into its banks to try to protect its financial system from the economic turmoil spreading across the euro zone.
The announcement came the same day that Spain and Italy — two of the continent’s largest economies — saw their borrowing costs soar, with Spain’s reaching record levels.
While Britain uses the pound, not the common currency, and the country’s banks are strong, the rest of the European Union is its largest trading partner. In addition, British officials have become increasingly concerned since the country slipped into recession earlier this year.
The measures revealed by Chancellor of the Exchequer George Osborne and Bank of England Governor Mervyn King are similar to programs rolled out by the United States during the depths of its financial crisis in 2008.
“We are not powerless in the face of the euro-zone debt storm. The government — with the help of the Bank of England — will not stand on the sidelines and do nothing as the storm gathers,” said Osborne, who heads the British Treasury.