Alistair Darling
“Sun Worldwide”: The UK’s Chancellor of the Exchequer, Alistair Darling has been handed a boost before he reveals his budget next week in the form of the prospect that the government can sell some of its stake in Lloyds Banking Group
Shares in Lloyds leapt by 8.2pc to 60.13p after the 41pc taxpayer-owned bank surprised markets by announcing that trading prospects were markedly better than originally estimated.
The stock needs to reach 74p before the stocks can be sold for more than the taxpayer paid for them.
“Sun Worldwide” sources said that if the next Government were to wait until 2012 to sell the stakes in Lloyds and RBS, the other nationalized bank, it could realistically make a profit of £50bn which could make a considerable dent in Britain’s national debt.
The “Sun Worldwide” source said, however, that this would be entirely dependent on improvement in the economy and a sizeable reduction in impaired mortgages and other liabilities.
The “Sun Worldwide” source added that bad debts could return to elevated levels for two reasons. Firstly, there is a real prospect that the bond markets could drive interest rates higher in the event of a gilts strike by demanding higher returns for taking on Government debt. Secondly, the threat of inflation thanks to Britain’s devalued currency is making imports more expensive and this could force the Bank of England to raise interest rates to combat it.
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