In yesterday's post, I complained about the fact that the UK banks had directly benefited from the series of interest rate hikes by the Bank of England, increasing their first half profit levels by between 24 and 50%. Millions of homeowners in the UK are going to have to find hundreds of pounds more every month when their fixed rate loans come up for renewal. And the effects are going to get worse in the coming months.
The fact that this is a direct result of the way loans are made in the UK is made abundantly clear from a recent article in The Banker.
"While rising interest rates have benefitted most banks’ bottom line in the form of higher net interest income, contributing to higher levels of net interest income for most European banks, French banks have not benefitted as much due to characteristics unique to the French market.
Unlike the UK where mortgages are either fixed, variable or track the Bank of England base rate, in France most mortgages are fixed....
These characteristics of the French market explain French banks’ ‘subdued’ domestic retail banking revenues."
I can imagine that the Bankers at the big French Banks will be envious of the massive bonuses that their colleagues in the UK will be raking in at the end of the year. And they might be tempted to argue that Macron should shift to the wonderful UK based system where banks can "earn" massive profits every time the Central Bank decides to ramp up interest rates - "in order to control inflation".
But firstly, the French should fight any such attempt to further rig the system in favour of bankers.
And second, I claim that the millions of people in the UK who have to put up with this insane system should be protesting very strongly. Any political party that proposed an end to variable rate loans at the general election next year would probably get a lot of support.
Is anyone with Labour, the Liberals, the Greens or elsewhere listening?