It looks like we are heading for round three of the credit crunch. UK interbank interest rate spreads are again rising. As of March 28, banks needed to pay 98 basis points more to borrow 3 month money relative to a 3 month repo using UK government paper. Back in good old days when banks trusted each other, the spread ranged from between 9-12 basis points.
Data source: Bank of England, Daily Sterling interbank lending rate, 3 month, mean LIBID/LIBOR (IUDAMIJ); daily 3 month Gilt repo interest rate (IUDGR3M)