It’s all happening in the financial markets, with the Bank of England cutting the base rate to 4.5 per cent and Alistair Darling’s £500 billion rescue plan…
Chancellor Darling’s plan aims to bring Britain’s high street banks back from the brink of collapse and boost consumer confidence with a part-nationalisation.
Mr Darling has been a busy bee. On top of gambling £500 billion of taxpayers’ money to beat the credit crunch, he has told the Bank of England to cut interest rates and even found time to bail out all of Icesave’s savers.
He has said that the moves come in response to ‘extraordinary times.’
Half of the money is being offered to banks in a move that would make them semi-nationalised, allowing them to have the cash as capital in return for the Government taking a stake in the form of preferential shares. The other half will be metered out at a later date.
£200 billion will be given to the banks in short-term loans under the Special Liquidity Scheme set up to keep the financial system working on a day-to-day basis.
If no bank goes bust then none of the money will be needed atall. The total amount of public money involved is more than the entire £324 billion annual spending total by Whitehall departments.