How much Britain lost in the crisis? £200 billion, £130 billion or £60 billion

Last night after being forced to withdraw a claim that Britain faces a bill for almost £200 billion for the bank bailout the IMF was facing a potentially huge confusion. The UK Treasury claimed the figure was “wrong” and had been issued in error. The dispute comes as the Chancellor Alistair Darling is set to issue his own estimate of the cost of the bailout when he delivers the Budget today, reports the Times.

IMF retracted the figure correcting it to the original estimate of £130 billion. The Chancellor is expected to give a much lower estimate of a final bill of £60 billion.

In the International Monetary Fund’s Global Financial Stability Report there was no immediate explanation for the error. The IMF said the huge losses inflicted on banks across the West by the credit crisis and lax lending would surge to $4 trillion. 

The IMF calls upon the governments to clean up banks and financial groups swiftly and to purge them of toxic assets. Fund warns that failure to follow this urgently risks worsening the banks’ stability and prolonging the global economic recession.

The fund has sharply raised its estimate of losses on lending, first made in the United States, for a second time, to $2.7 trillion. That compares with an initial forecast of just under $1 trillion and a $2.2 trillion estimate six months ago. For the first time, the IMF has also issued estimates of likely losses inflicted by lending originated in Europe and Japan. It puts likely write-offs due to European lending at $1.19 trillion and those for Japan at $149 billion. 

New losses to be written off by British banks this year and next are put at $200 billion, compared with $750 billion for eurozone banks and $550 billion for the US. The fresh UK losses come on top of $110 billion already written off up to the end of last year.

Source: The Times