Man of Letters

Letter Published Friday 21 September'07

In The Northern Echo

Sir

Don't Rock the Rock.

Confidence is a delicate thing. Savers are no longer queuing at the doors of Northern Rock for their money back because there is enough residual trust left in the government to believe, for the time being, the Chancellor's promise that the taxpayer will underwrite the finances of the bank.

The last thing in the world Northern Rock savers need is any doubt. from the EU Commission. This week Brussells has requested information from the British authorities over the government support of Northern Rock, concerned that it could violate EU state aid laws if support leads to distortion of the banking market.

The one thing the Chancellor did not make clear was that his guarantee to Northern Rock savers is conditional – and time-limited. The "conditionality" is that any guarantee made is valid only insofar that it conforms with EU requirements, for the time period in which it is allowable. If Northern Rock savers come to the conclusion that, at any time, the EU can pull the rug from under the UK government, then we may see queues re-forming outside the bank offices and this time there will be nothing that can be said which will turn them away.

If I still had any money in Northern Rock (or any money at all), I would be very worried.

Peter Troy, Sedgefield.

(With thanks to Dr Richard North)