£16,000 EACH: That's what every one of us could have to pay for the Great Bank Nationalisation

The colossal £500billion rescue package for the banking system could cost every taxpayer £16,000.

That figure is the share of the bill we all face should Gordon Brown's gamble not pay off.

The devastating prospect, and the fear of tax rises, emerged after a day of astonishing developments in which:

Mr Brown announced the Government would pump an extra £200billion into stalled money markets, buy a £50billion share of major High Street banks and offer them a £250billion guarantee on their debts.

The Bank of England cut base rate by half a per cent as part of coordinated action by world banks.

Four major mortgage lenders immediately passed on the cut to their borrowers.
But the markets reacted badly to the changes, as the FTSE continued its downward spiral with a fall of 238.53 points to close at 4366.7. The Dow Jones was also down, by almost 200 points.



In a symbolic blow to the Prime Minister's reputation, the London stock market finished lower than the day Labour came to power in 1997.

And the prospect of a £50billion state investment in bank shares led to concern that pension funds - already 15-20 per cent down in the past year - could see their value fall further as dividends are diverted to the Government.

Mr Brown pinned his hopes on a record injection of public cash to stem a financial meltdown.

He tore up his economic rulebook to offer banks the rescue plan. But the action came in for sharp questioning as MPs and analysts predicted it was 'too little, too late'.

What Mr Brown hoped would be seen as a decisive move was dogged by accusations that the Government has 'dithered' in the face of global turmoil.

He acknowledged the scale of the task he faces but refused to put a price tag on what it will cost the taxpayer.

The Treasury suggested it could eventually make a profit from the venture, with some analysts suggesting it could rake in £4billion a year from the scheme.

But there were fears that the Government had woefully underestimated the price tag for his unprecedented financial rescue.

The move marked the death knell of Mr Brown's 'golden rules' on borrowing by pushing the Government's overdraft to nearly 50 per cent of gross domestic product - way above the 40 per cent limit he had laid down.

Experts predicted that the true cost of supporting the banking system will continue to escalate as Britain enters an increasingly painful recession.

Rising debt defaults and sinking property values could carve yet bigger holes in top banks' balance sheets, forcing the Treasury to pour yet more cash into the City.

A report yesterday showed Britain had sunk yet further in global competitiveness rankings, from 9th to 12th, as the economic backdrop darkens.

And the highly respected International Monetary Fund warned that the world faces the most dangerous financial crisis for 70 years as global stock markets slide.

Mr Brown and Chancellor Alistair Darling revealed the unprecedented package of measures in an emergency statement as the stock exchange opened. continues here

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