So after the announcement from the government last night, calm seems to have returned to Northern Rock branches across the country – well aside it seems for Golders Green where savers were still queuing this morning with the government guarantee being seen as some sort of ruse.
However social commentators are already starting to draw comparisons with another September panic – the UK Fuel Protests, or more precisely what happens if ever there is a rumour of another blockade. For example in September 2005 after a series of news stories about potential protests, long queues started forming outside petrol stations, and thousands were emptied of supplies. However the protesters said several times that they had no intention of blockading refineries again, and in the event only a small number even protested. The panic produced more of a problem than the event itself.
In exactly the same way, the Northern Rock applied for a bail out from the Bank of England, and despite people regularly saying that the bank was financially solvent, queues quickly formed of savers withdrawing their money, exacerbating the problem.
So was it right in both cases for people to panic? In the case of the September 2005 Fuel Protests people only needed to remember a few years before to the chaos that was caused by the first UK Fuel Protests. There was also a general level of mistrust both of the protesters themselves, and of government assurances. This time around, again people distrusted government and official assurances. Also anybody who looked at the compensation scheme realised that for any sort of reasonable level of savings, you were going to lose – only the first Â£2000 is fully guaranteed. Certainly back in 2005, whilst I didn’t queue for hours, I did make sure I’d filled up both cars so as we could get to work, and if I’d had any money in the Northern Rock I’d probably have moved it as a precaution.
So maybe the commentators are slightly wrong, the British don’t like a good panic – they just fundamentally don’t trust people in authority and what they say – hence why the people in Golders Green were still withdrawing their money this morning.