UK banks may need more taxpayer's cash, warns report

A new report has warned that as funding pressures mount UK banks might have to be bailed out yet again by the taxpayer.

The report, published by a think-tank called the New Economics Foundation (NEF), argues that the banking system is borrowing more than it is lending and that UK banks are facing what it labels a 'funding cliff'.

It states that in order to maintain existing levels of activity banks have to borrow £12bn a month, but that this figure could rise to £25bn a month next year.

"The public sector is likely, once again, to be asked to bail out the banks for the emerging funding gap," the report concluded.

The NEF also warned that the scale of proposed cuts to public spending "is being influenced by the likelihood of another wave of bank bail-outs".

The think-tank has called for the UK banking system to be radically reformed, including the imposition of a 'Robin Hood tax', which would see transactions taxed at source, as well as better regulation.

It also wants a UK Community Reinvestment Act which would demand that banks lend money where they are prepared to take deposits.

Chancellor of the Exchequer George Osborne told Sky News that he was neither expecting nor had been given any indication that the banks would need further support from the British taxpayer.

The British Bankers Association argued that not all banks had received taxpayer's money, and those that had were paying a comensurate rate of interest for the bailout.