UK stocks rose yesterday and again today promising a recovery from last week’s decline. The rise stems from the speculation that  more support is to be offered to European financial companies from European leaders.

Royal Bank of Scotland’s stock rose by 6.1 %, Barclays gained 7.3 % and Tesco showed a rise of 2.3% as financial expert and investor Warren Buffett increased his stake in the supermarket chain to a reported 3.64 %.

Legal & General Group Plc advanced 6.4 % to 97.45 pence. Aviva Plc climbed 7.8 % to 298.9 pence. Insurers posted the biggest gains among shares in Western Europe today. Yet it seems fraudulent claims are still being blamed in the media for our high premiums. The insurance companies don’t seem to be suffering too much and they continue to make huge profits at the public’s expense. Then they have the audacity to blame us for increasing prices; the worst part is that we actually buy it! I think it’s time we had a good look at the way insurance companies exploit consumers in the UK.

Fresnillo Plc slumped 4.2 % to 1,568 pence as silver had the biggest drop since 1980 in London. The FTSE All-Share Index gained 1.2 % today and Ireland’s ISEQ Index climbed 2.1 %.

Amid fears of a “dangerous” new economic phase five central banks have committed to boost the liquidity of commercial lenders.

IMF managing director Christine Lagarde said “bold action” was needed and that “Uncertainty hovers over sovereigns across the advanced economies, banks in Europe, and households in the United States.

“Without collective, bold, action, there is a real risk that the major economies slip back instead of moving forward.”

So the Federal Reserve, Bank of England, European Central Bank, Bank of Japan and Swiss National Bank have all stepped in to help out commercial lenders. New loans are being issued in dollars, because European banks can already access additional euro funds from the European Central Bank.

The loans will be issued in October, November and December. This won’t be the first time the Central Banks have stepped in as they took a similar action during the 2008 financial crisis.

The move has been welcomed by analysts, but warned that this action would not be able to tackle the underlying problem of high levels of euro zone sovereign debt on its own.

Peter Boockvar, equity strategist at Miller Tabak in New York said of the move “The stress is still there as long as sovereign debt issues aren’t dealt with aggressively, but this move eases short-term funding problems.”

The Independent Commission on Banking, set up by the Treasury have proposed changes that will shake up how British banks do business in the future. The changes are the most radical UK institutions have faced in over a decade.

The plan proposes that all the UK’s banks will have to put their retail investments behind a firewall to protect vital services for small businesses and individuals. However these firewalled investments will also be available to house savings of big corporations as well as big corporation loans.

Global wholesale/investment banking, such as trading in securities and derivatives, would not be eligible to be placed behind a firewall or ring fence.

Those affected the most by the reform are Barclays and Royal Bank of Scotland who have large wholesale and investment departments that will not be allowed to be placed behind the firewall.

Most of Lloyds and Santander’s business would be eligible to be firewalled and although HSBC may face some re-organisation it certainly won’t be to the extent required of RBS and Barclays.

Other areas of major reform in the plan include an increase in capital requirements and the providers of long-term unsecured loans suffering losses when a financial crisis hits.

This has been put in place to try and protect taxpayers and give investors and lenders the responsibility of paying to rescue banks in a crisis. The banks are likely to be critical of new reforms as it will increase their costs and for once shift responsibility of risky investments back to those who take that risk.

The Independent Commission on Banking has said:

“The cost of capital and funding for banks might increase. In so far as this resulted from separation curtailing the implicit subsidy caused by the prospect of taxpayer support in the event of trouble, which would not be a cost to the economy. Rather it would be a consequence of risk returning to where it should be – with bank investors, not taxpayers – and so would reflect the aim of removing government support and risk to the public finances.”

The Public Accounts Committee has released a report that shows PFI investors to be ripping off British tax payers.  PFI (Private Finance Initiative) is where private companies agree to build and run schools, public infrastructure and hospitals under long term contacts that can last for as long as 30 years.

The arrangement was put in place to allow the treasury to keep the costs off their balance sheet but the treasury has come under fire from the Public Accounts Committee for assuming that these contractors will pay the appropriate tax. Most of these companies however, use offshore tax havens as their base to increase there already huge profits.

Margaret Hodge, the Labour MP who chairs the committee said “They’re milking the PFI system for profit,” and that treasury officials have been “dreadfully complacent” when tackling the problem.

One of the UK’s largest investor in PFI, Innisfree, told committee officials that 72% of its shares were held by investors offshore. This stashing of funds in offshore accounts means that taxpayers are being short changed and the treasury department seems to be taking no action to re-coup the money owed.

A spokeswoman for the Treasury said, “The government is committed to ensuring taxpayers get value for money from PFI and has already made a number of changes to improve the cost effectiveness and transparency of PFI contracts. We are also committed to delivering £1.5bn in efficiency savings across nearly 500 PFI projects, money which will be able to go back into frontline services.” However the committee has urged them to move the process along much quicker than what is currently being proposed and that taxes owed should be reclaimed from the private investors.