3rd January 2013
The windfall, owed by banks to their customers, is equivalent to more than 1.5p off the basic rate of income tax.
The news will be especially welcome to Ministers hoping to avoid another lurch into recession after last week’s dire survey of the critical services sector, which suggested a fall in output in December. There is hope that the economy will grow as recipients of compensation opt to spend this on consumer goods and services.
Not much help is expected when the Bank of England’s Monetary Policy Committee meets this week. There is no expectation of a further cut in interest rates or an expansion of the Bank’s £375billion quantitative easing programme of money creation.
Against this background, the extra £6billion will come as a welcome relief, especially as a large proportion is likely to be spent rather than saved.
During 2012, banks increased their total PPI provision to £12billion and it is widely expected to grow further. Payouts have totalled at least £500million per month since March.
Posted in PPI, Mis-selling Scandal, UK, Banks, Payment Protection Insurance