Page last updated at 10:39 GMT, Wednesday, 8 October 2008 11:39 UK

Reaction to banking rescue plan

The UK government has announced details of a rescue package for the banking system worth up to 50bn ($88bn).

As part of the package, a further 200bn will be made available by the Bank of England for short-term borrowing to provide liquidity to banks and building societies.

Gordon Brown said the package was "designed to put the British banking system on a sounder footing".

But will it work? Here is the reaction from politicians and key business people.

GEORGE OSBOURNE, SHADOW CHANCELLOR

The real test is not whether the money goes to the banks, but whether the banks then start lending to small businesses and families. That's the real test - are we going to get credit flowing through the veins of the economy again? In the end, we are not rescuing the banks, we are rescuing the banks to rescue the economy.

HBOS STATEMENT

The government's announcement represents a very real and serious intention on the part of the authorities, following consultation with the banking industry, to bring stability and certainty to the UK banking system. HBOS believes that this initiative is very much in the interests of its shareholders and customers.

TERRY SMITH, CHIEF EXECUTIVE, TULLET PREBON

They've [the money markets] got additional capital now if they want it, they've got an unlimited source of liquidity. That certainly should stop the panic in terms of people wondering whether or not the banks are safe.

SIR FRED GOODWIN, CHIEF EXECTUIVE, RBS

We welcome this comprehensive package of measures in response to unprecedented conditions in the financial system. The government has increased support in a number of important areas. The proposals will enable us to strengthen our position and to support our customers across the economy.

JOHN MCDONNELL, LABOUR MP

Without full nationalisation, the government is effectively nationalising the banks' losses and privatising the profits so that taxpayers will now pay for this crisis caused by the greed of the bankers.

JEREMY BROWNE, LIBERAL DEMOCRAT TREASURY SPOKESMAN

The government is taking the right action. Whether this money is sufficient remains to be seen. Obviously we hope that it is and that the terms negotiated are such that the banks behave with greater restraint and good sense in the future, and that the taxpayer gets a return, but at the moment the immediate priority is to unlock the system. The government is committed to this policy and there isn't an alternative out there - I haven't heard anyone say that the banks shouldn't be assisted.

ALEX POTTER, COLLINS STEWART

The government is insisting on tighter control of capital, dividends and executive pay. We feel that dividend payouts for the main four UK domestic banks will be severely impacted with the possibility of no cash payout until 2010 or later.

JOHN CRIDLAND, DEPUTY DIRECTOR GENERAL, CBI

We welcome today's essential measures which strengthen the British banking system, and will help provide financial stability for the country. British business is facing a freezing of bank finance. Many companies need this action to keep investment and working capital flowing. This step to build confidence in the City needs to be followed tomorrow by a half-point cut in interest rates to boost consumer confidence.

ADAIR TURNER, CHAIRMAN, FSA

The comprehensive package announced today will ensure that our banks and building societies are undoubtedly robust. It should restore confidence to the whole financial system. We will continue to work closely with firms, and with our colleagues at the Bank of England and the Treasury, to steer our financial infrastructure through the current global turmoil in good shape to meet the needs of consumers, businesses and society as a whole.




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