The one thing noone has so far mentioned is the lack of tax that every bank and financial institution will be paying over the next 12 months.
Collectively, the Banks in the UK pay about 25% of all company taxes. On present form, much of this will be wiped out by the CDOs, SIVs and God knows what else that has been bundled out of sight. This has to happen every now and again so the banks can have massive rights issues ( question: if they are doing well, what do they need more money for?) and so that they can then report growing profits for several years until the next disaster they think of. Even the bonuses that drive quite significant parts of the UK economy will be short this year - less tax again and less free cash spilling about.
If - as is reported today - RBS really does write off £12BILLION, Mr. Darling ( or whoever it is next year) might even have to pay them money back.
And where would the shortfall come from?
I don't really need to answer that, do I?