Northern Rock to be nationalised

The Government has now confirmed that Northern Rock is to come under public ownership. This is believed to be a temporary measure.

This follows months of indecision over which route to take for the struggling bank. The move has been undertaken after talks with the Bank of England and the Financial Services Authority (FSA). It is though that temporary nationalisation will provide better protection for taxpayers money.

Northern Rock has borrowed about 25 billion pounds from the Bank of England since the liquidity crisis in the money markets lasy year ruined its funding model.

Northern Rock has been put on the government's books as around 90 billion pounds of public debt.

The bank will be run from a distance but still on a commercial business by Ron Sandler and Ann Godbehere.

The debacle is a headache for Gordon Brown and Alistair Darling who have both spoilt the reputation of the UK as a financial hub. It has also undermined their reputations as guardians of financial stability.

There has also been anger from shareholders as they are likely to receive a small pay out and legal cases are likely to follow.

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