Britain may be forced to bail out tax havens- papers

Britain could be forced to bail out one or more of its offshore tax havens at huge cost, according to early drafts of a Treasury report, because the economic crisis has wrecked their finances, according to the Guardian.

Offshore expert Michael Foot will next month set out a number of options to government ministers in the report as anxiety grows within Whitehall over the health of Britain's overseas territories and crown dependencies.

Senior insiders say early drafts of Foot's report suggest that the government may need to make provisions for the financial failure of British tax havens. Experts suggest the failure of a major tax haven could potentially cost the UK tens, if not hundreds, of millions of pounds. Full story...

Governments have failed to rein in the size of banks sufficiently 12 months after the collpase of Lehman Brothers triggered a meltdown, Nobel Prize winner Joseph Stiglitz has warned, reports The Telegraph.

Mr Stiglitz, who is former chief economist at the World Bank, told Bloomberg News that "in the US and many other countries, the too-big-to-fail banks have become even bigger.

"The problems are worse than they were in 2007 before the crisis."

Mr Stiglitz joins the growing debate about how best to avoid a repeat of the worst financial crisis in decades without choking off growth in the financial services industry. His view has been echoed by former Federal Reserve chairman Paul Volcker, who has advised President Obama's administration to curb the size of the banks. Full story...

Two of Britain's biggest lenders hiked the cost of new mortgages last week - one day after Bank rate was kept on hold for the sixth consecutive month, The Times reveals.

Royal Bank of Scotland (RBS), 70% owned by the taxpayer, increased the cost of new mortgages by up to 0.7 of a percentage point. The move takes some of its five-year fixed-rate deals from 5.99% to 6.69%, increasing the cost of a £200,000 loan by £1,400 a year.

Nationwide, Britain's biggest building society, also hiked rates for remortgages last week - by up to 0.2%.

Lenders have consistently put up the cost of new mortgages in the past six months, despite Bank rate being on hold at 0.5% since March. Experts warned that fixed-rate mortgages could soar to 10% when the Bank of England starts to raise rates again, if lenders continue to profiteer. Full story...