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London. The Treasury was under pressure last night to guarantee the savings of all depositors in British banks after Germany announced it was following the lead of Ireland and Greece and offering a blanket guarantee on all savings - currently worth EUR 568 billion. Late last night Denmark followed suit, reports The Guardian.
Britain had just agreed to raise its maximum level from GBP 35,000 to GBP 50,0000, but may now need to take more radical steps to avoid a flight of savings.
British officials were furious with the German chancellor, Angela Merkel. They said she gave no indication of the move at a summit in Paris on Saturday designed to coordinate a European response to the economic crisis. The Treasury was last night trying to establish the implications of the German move.
Speaking of the decision by the Greek and Irish governments to offer blanket guarantees, the new business secretary, Peter Mandelson, said yesterday: "It would be better while operating on a country by country basis, we did so in a coordinated way and we brought a collective European view. We are all interlocked. We are in this together."
Denmark later guaranteed all bank deposits as part of a deal with banks to set up a GBP 3.6 billion liquidation fund.
ALEX BRUMMER: This could damage the whole of Europe | Mail Online
ALEX BRUMMER: This could damage the whole of Europe
By Alex Brummer
Last updated at 3:11 AM on 06th October 2008
The Berlin government's panic decision to insure all the private deposits of the German banking system represents one of the most astonishing U-turns of recent times.
Chancellor Angela Merkel and her finance minister Peter Steinbruck pledged at a weekend summit in Paris that they would not take any unilateral action on the credit crunch.