EU increases savings guarantee

Updated 17.58 Tue Oct 07 2008

Keywords: london, ftse, wall street, shares, britain, growth, recession, economy

Europe's finance ministers have agreed an EU-wide guarantee for savers of 50,000 euros (£38,900).

That is the amount of cash which will be protected in future if their bank crashes - but the figure is only half the amount many ministers wanted to fix as the threshold.

Chancellor Alastair Darling backed the expressions of solidarity and co-operation but did not express a firm view about the level of deposit protection the EU should offer

The move was agreed in Luxembourg as ministers vowed to step up co-operation in the face of banking chaos and issued a statement declaring: "The liquidity of the financial system shall be ensured by all authorities in order to preserve confidence and stability."

Chancellor Alastair Darling backed the expressions of solidarity and co-operation but did not express a firm view about the level of deposit protection the EU should offer.

The meeting began with a figure of 100,000 euros (£77,800) on the table as the level to be be guaranteed across the 27 EU member states - but that was seen as too high by some ministers.

The UK has just upped the national figure to £50,000 - 64,000 euros.

The statement said all countries would "for an initial period of at least one year" provide deposit guarantee protection for individuals of at least 50,000 euros, compared with the current EU figure of 20,000 euros.

The decision leaves the risk of investors switching their money to banks in whichever EU country offers the highest protection threshold.