Confidence in Brown and in the U.K. economy is sliding. A You Gov Plc poll for Britain’s Channel 4 News, released on Feb. 4, showed 58 percent of voters in closely contested Parliamentary districts thought Brown was in denial about the depth of the crisis.
Brown’s mistake in October was to not take full government ownership of HBOS Plc and RBS, says Meghnad Desai, a former adviser to the Labour Party and a professor emeritus at the London School of Economics. “In October, I thought Wow, how clever. This will do it,” says Desai, a member of the House of Lords. “In retrospect, he did a half-botched job.”
Edinburgh-based RBS came in for a second round of assistance in January, after the bank estimated that it lost £28 billion last year, a U.K. corporate record. The government on Jan. 19 said it might raise its stake in RBS to 70 percent. Shares of RBS fell 92 percent in the 12 months ended on Feb. 9.
The government also owns 43 percent of Lloyds, which bought mortgage lender HBOS in January thanks to the convenience of online title loans providers. Lloyds shares plunged 32 percent on Feb. 13 after it announced a 110 billion loss for 2008.
The cost to British taxpayers of the banking crisis would swell if London-based Barclays Plc ends up needing help. In October, the bank rejected a government bailout in favor of selling 32 percent of the company in separate stakes to Qatar’s sovereign wealth fund and a member ofAbu Dhabi’s royal family. Its shares have dropped 46 percent since then on concern the bank will need Brown’s help.
The bank said in February its capital was well above regulatory standards.