New World Order: Global co-operation, nationalisation and state intervention - all in one day
Lindsay McIntosh - 09 October 2008
IT WAS a day of desperate global action, unprecedented in both scale and cost, intended to stymie the international devastation being wrought by the financial crisis.
As the London stock market steeled itself to open again following days of vicious battering, Alistair Darling, the Chancellor, rose to stake the future of the country and the Cabinet on an audacious £500 billion banking bail-out.
And barely had the City begun to digest the hugely complex and unorthodox scheme when it was sent reeling again by an unscheduled interest rate cut – mirrored across the world – by the Monetary Policy Committee. It was the first such co-ordinated approach since the 9/11 terrorist attacks in 2001 – yet another indicator, had one been needed, of the gravity of the situation.
The half percentage point drop was immediately passed on to millions of borrowers, with leading high-street banks cutting their mortgages.
The government’s scheme, a three-part plan which takes in short, medium and long-term measures, was welcomed by business leaders and analysts.
David Kern, adviser to the British Chamber of Commerce, said: “The government has taken a radical step, but it is one we welcome.”
But there was concern a phenomenal amount of taxpayers’ cash was being staked on a last-ditch measure that could fail. The Taxpayers’ Alliance accused ministers of failing to address other options first.
Meanwhile, the International Monetary Fund (IMF) issued a fresh warning that Britain was on the brink of recession.