Britain will reprivatise bailed-out lender Royal Bank of Scotland by selling 15 billion pounds ($20 billion) of shares to try and boost the UK government's coffers. As Ciara Lee reports, it follows a grim outlook from the budget and new GDP numbers which suggest the economy is slowing due to Brexit concerns.
The British government pumped 45 and a half billion pounds into the Royal Bank of Scotland during the financial crisis. Efforts to recoup the money ever since have failed. Numerous regulatory issues and Brexit have strangled the bank's share price. It's currently around half the 502 pence the government paid. Even so it's decided to sell. 15 billion pounds worth of shares will be offered - at current prices that's around two thirds of the 71 per cent stake. (SOUNDBITE) (English) SENIOR MARKETS ANALYSTS, OANDA, CRAIG ERLAM, SAYING: - "We could of course hold on to the stake for another 10 years and hope that the share price bounces back. But I think that's seen as undesirable in a large part by the government because it doesn't want to be, it doesn't want one of its largest banks to be state-backed. I think it's something that has been forced on to the government as result of these Brexit negotiations. Revenue has to be raised from somewhere." The sale was part of the UK finance minister's budget plan. He's cutting his losses at a time of slowing growth. Latest figures show the UK economy grew by 1.5 percent in the third quarter - the joint weakest for five years. Poor productivity is partly to blame. (SOUNDBITE) (English) SENIOR MARKETS ANALYSTS, OANDA, CRAIG ERLAM, SAYING: "We've seen clear evidence that businesses are investing less. That's largely driven by the uncertainty of Brexit in what their future trade relationships are going to be." Britain's economy still relies too much on household spending. That's now under threat too. Finances are being squeezed by higher inflation and lower wage growth. And the Brexit uncertainty goes on...although the Prime Minister is off to Brussels for a meeting on Friday.