The burden of the banking bailout has been heavier in Britain than the rest of the western world, according to alarming figures published today.
The UK has committed public funds worth almost 75 per cent of national income, or around £1trillion, to saving the City, according to the Bank of England.
That compares with bailout costs worth just 30 per cent of gross domestic product in the Euro Zone and 50 per cent in the United States.
Expensive bailout: Saving the City from its own greed cost UK taxpayers £1trillion
The staggering numbers, contained in the Bank's biannual Financial Stability Report, underline the terrible price the British public has paid following a binge of risk-taking in the City.
The official aid includes injections of cash into banks, state guarantees of their debts, and central bank interventions.
And despite receiving such vast quantities of taxpayer help, banks' finances remain hugely over-stretched and vulnerable to economic setbacks, the report warned.
The Euro Zone figures are an average, which hides variations in the state aid between individual countries.
But British lenders will have to find the money to re-finance £1trillion of their debts in the coming years.
The Bank urged banking bosses to hoard far more of their earnings in future, rather than paying out big bonuses and dividends.
Cutting bankers' pay by just a tenth and dividends by a third over the next five years could save £70billion, which could be used to shore up firms' finances, the Bank said.
That comes after banking bosses gave out £375billion to employees and shareholders in the eight years leading up to the credit crunch.
Demands that lenders conserve more cash will further enrage bankers who feel they are already being unfairly punished by measures such as the new bonus tax.
This week Royal Bank of Scotland chief Stephen Hester attacked political interference in his pay policies, saying his inability to offer big bonuses had helped wipe £15billion from his firm's share price.
Interference not welcome: RBS boss Stephen Hester attacked political interference, saying his inability to offer big bonuses helped wipe £15billion from his firm's share price
Yet the Bank report spells out the deep-seated damage the banks are continuing to do to the economy.
It warned that the cost of shoring up the financial system has 'put pressure on national balance sheets in a number of countries'.
And after Ireland and Greece suffered cuts to their credit ratings, the Bank said there could be further downgrades ahead in the absence of 'credible' deficit-cutting plans.
While this part of the report did not mention Britain, some investors are afraid our prime triple-A credit rating will be cut in the coming months.
The Bank also warned that while British families are benefiting from ultra-low interest rates now, that will not always remain the case.
The report said household finances are 'stretched' as debts remain at near-record levels when measured against assets such as houses.
Arrears on unsecured loans such as credit cards and overdrafts 'remain high,' and many borrowers will be hit by ' payment shocks' as mortgage deals expire and they move on to variable-rate loans.
And while savers have enjoyed one of the biggest stock-market rallies in British history in recent months, there are serious dangers of a reversal as interest rates increase, the report said.
Meanhile, yesterday further evidence emerged of enduring pain triggered by the financial crisis as yet another foreign country clawed its way out of recession ahead of Britain.
Ireland grew 0.3 per cent in the third quarter compared with the previous three months, official figures showed.
The UK is not expected to start growing until the fourth quarter of the year.
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