After a day of historic developments and unprecedented government attempts to stabilise the economic system, London's key FTSE 100 share index closed 238.5 points (or 5.18%) down, at 4366.7.
The director of the Institute of Fiscal Studies, Robert Chote, says the measures to rescue banks and their customers could push the government's debts towards 50% of national income - way above the 40% ceiling Gordon Brown set himself in 1997.
1624 Iceland's prime minister, Geir Haarde, says he hopes to find a "mutually satisfactory
Solution" to the loss of British savers' deposits with IceSave.
The prime minister's official spokesman says the government is "ready to sit down and discuss" with councils the problems they are facing over IceSave accounts. He denies there was any lobbying of Bank of England Monetary Policy Committee members ahead of the decision to cut interest rates.
1615 The government-backed National Savings and Investments group has announced it is cutting the returns paid on its ISA following the 0.5 percentage points fall in the official cost of borrowing.
1603: By e-mail
What happened to Bank of England independence? What's the point of having it if, when push comes to shove, the government tell them what to do for political reasons? Mr Micks
The White House welcomes the central banks' decision to cut interest rates by half a percentage point in an effort to stem the financial crisis. "It's important and helpful that central banks are working in a co-ordinated way to deal with stress in the financial system," says spokesman Tony Fratto. The US presidential hopefuls, Democrat Barack Obama and Republican John McCain, also say they support the rate cut. "This is a global crisis that requires a global solution," says Mr Obama, adding that "more urgent and vigorous action is necessary". Mr McCain says it is imperative that the "government be responsive to the needs of Americans, restore confidence in our financial system, provide assistance to struggling homeowners, and implement pro-growth policies that will create jobs".
1554: Via text Tell your viewers to fill their cupboards with tinned food, and have some cash in hand. They are going to need it. Peter, Kettering.
1553: Via text
Why is it that the government were told to hurry up with a help plan but the finance houses are going to mull over the plan before something good happens in the finance system? Mrs Clifford, Essex
1549 Federation of Small Businesses chairman John Wright voices some concern over the 0.5% interest rate reduction, saying: "This should be very helpful to Britain's small businesses, but the welcome cut will only come into play if the banks follow through and reduce their charges to
small businesses accordingly."
1548 Philip Hammond, shadow chief secretary to the Treasury, tells the BBC the current situation is a "national emergency", which requires a cross-party consensus.
1545 Round-up of the day so far: The UK Treasury has announced a financial lifeline, which could ultimately be worth up to £500bn, to try and stabilise the UK banking sector. Opposition parties broadly backed the plans, which could see the government inject up to £50bn in capital - essentially taxpayers money - into leading banks and building societies. As fears of a prolonged global recession rise, the Bank of England, the US Federal Reserve and the European Central Bank each announced an emergency 0.5% cut in interest rates. But this unprecedented move has had only a limited impact on the turbulent stock markets. Despite recovering slightly, the FTSE 100 was still down 2% in London by mid-afternoon while markets in Germany and France were down by more than 3%. But in the US, the Dow Jones rallied in early trading after the sharp falls of recent days. In another key development, the UK government moved to protect deposit holders in UK offshoots of Icelandic banks, threatening legal action against Iceland to recover money from one collapsed bank
1537: London's benchmark FTSE 100 index has fallen back further - more than 200 points down on the day now. Time was when any interest rate cut would send markets higher, but these are far from normal times and it seem that the lunchtime moves - and the huge bank rescue package - have failed to halt the slide.
1535 Green Party leader Caroline Lucas says: "If we're going to be asked to bail out the banks, we want something for our money. We want to know that the banks are going to be run responsibly from now on, and that means, as part-owners of these banks, we want our fair share of the votes on the board."
1534: Via text Simple answer to all our financial probs: get the owners of Man City to buy Britain. Anon
1527: Via text
I can't agree with those who say people people who invested in IceSave don't deserve their money back as they weren't investing in Britain. HSBC isn't British; Santander isn't British.Jon, Lewisham
1523 More gloom in the UK. The Public and Commercial Services Union says 3,378 jobs will be lost as the government cuts its computer contracts over the next two years.
1524: Via text
"Taxpayer's money" is a myth. We don't have a say how it is spent. It simply belongs to the Treasury. Bar Smith, Selhurst, London
1514 Lib Dem Treasury spokesman Vince Cable says the government's actions are an "act of faith" but the "right act of faith".
Two of France's largest high street banks, Caisse d'Epargne and Banque Populaire, are talking about merging to create the country's second biggest banking group. Caisse d'Epargne said its board had approved plans for a merger and authorised its managers to "undertake discussions" with Banque Populaire.
1502 The Dow Jones is up almost 100 points, but the FTSE 100 is down by more than 100 points.
Some warm words from across the chilly north Atlantic. Einar Mar Thordarson, a political scientist at the University of Iceland, says many of her fellow nationals are " just sorry about" the whole IceSave affair. She adds: "And I can promise you, if it is any consolation, that we will have many years of hangover after a party that only a few Icelanders were invited to." Sore heads all round then.
1446 Despite that downbeat start the Dow Jones is slightly up - about 20 points - after 15 minutes of trading.
1445 One Labour MP tells the BBC that this is Gordon Brown's "Falklands moment". Strong words indeed. Only time will tell whether the government's actions have the same sort of electoral effect as the 1982 war is said to have had for Margaret Thatcher.
1444: By e-mail:
"Well it hasn't stabilised the FTSE, which has been up and down today like a yoyo"
Emily, Manchester, UK
1441 BBC political correspondent James Landale says the mood among Labour MPs is "pretty good", following the chancellor's announcements. Former home secretary David Blunkett says the country will be "in schtuck" if the plan does not work.
1441 After a few minutes of trading on Wall Street, the FTSE 100 is still hovering around 160 points below the day's opening level.
1435: Still early days, but the US Dow Jones index falls 1.93%, or 182 points, on opening despite the central banks' interest rate cuts. Elsewhere the International Monetary Fund's chief economist, Olivier Blanchard, says the co-ordinated interest rate cuts by the six central banks was a "step in the right direction", but warns that "more may be needed", particularly in Europe, as economies slow.
1438: By e-mail:
"I hope the rates are cut even further! What were they waiting for? More than half of my ridiculous salary goes on paying the interest rate of my mortgage! All these bankers are thieves!" Nad, Madrid, Spain
1433: The BBC's Richard Lister, in Washington, says investors can expect "hesitancy at best" during the day's trading on Wall Street.
1432 Yet further fall-out from the credit crunch - the Local Government Association, which represents councils, asks for "urgent reassurance" from the chancellor that he will protect its members' deposits in the Icelandic bank Landsbanki.
1430 Wall Street opens - the waiting is over. Where US shares go, much of the rest of the world - especially London - generally follow.
European stock markets are falling once again despite almost recovering the day's losses following the interest rates cuts. The UK's FTSE is 3.62%, or 166 points down at 4438, while Germany's DAX has dropped 3.59%, 191.45 points, to 5135.18. The French CAC index is down 3.47%, or 129 points, at 3602. Similarly, US stock index futures are dropping, with the Standard & Poor's 500 down by 19.80 points, or 1.97%, Dow Jones industrial average futures by 190, or 1.99%, and Nasdaq-100 futures by 33.75, or 2.53%.
1358 The European Commission has unveiled proposals to give more rights to consumers shopping online across the borders of the 27 nations of the European Union. The plan is aimed at boosting online shopping in Europe to allow people to take advantage of cheaper prices during the economic crisis.
1339 Mr Darling has now finished his statement and while there was broad support for the government's package on all sides in the Commons chamber, there is disquiet among some Labour backbenchers. Leading left winger John McDonnell has attacked it as a "poor deal for the taxpayer" that will lead to the loss of people's homes and jobs. Mr McDonnell, who speaks for the campaign group of Labour MPs, wants full scale nationalisation.
1334 Is this the first discordant voice? The formidable chairman of the public accounts committee, Tory MP Edward Leigh, warns of the "gravest risk to accountability when all sides agree". Mr Darling assures him there will be proper oversight.
1333 A first mention (almost) of EU commissioner-turned-cabinet minister Peter Mandelson. Asked if large contractors could also be included in the government's eight day payment guarantee mentioned earlier, Mr Darling says it is something that should be taken up with the new business secretary.
1332 What impact will the vast sums being pumped into the banking system have on the average voters' tax burden, asks the DUP's Nigel Dodds. Mr Darling says most of the money has been borrowed and will be paid back, but he will give more details in his pre-Budget Report.
1328 The UK Treasury confirms that another Icelandic bank trading in the UK has collapsed. The investment bank, Kaupthing Singer & Friedlander, was closed down by the authorities this morning. Its deposit business, Kaupthing Edge, was earlier transferred to ING Direct UK.
1327 From the BBC's David Thompson:
The Tory approach to the government's rescue package seems to be that while they will offer constructive support to the plan as a whole - there is, after all, no other show in town - their line of attack is a populist one. They want the Treasury to somehow outlaw large bonuses for executives while also forcing banks who accept help to step up their lending to small and medium-sized businesses. It's 'on-your-side' politics from the Conservatives - making the best of a position where their ability to criticise is constrained by the gravity of the situation.
1321 Russian Foreign Minister Sergei Lavrov tells the BBC that Russia had called for a forum to discuss economic issues at the G8 summit in Japan in July, but that the idea had not been taken up. "Now I understand G8 leaders are suggesting to consider an emergency meeting of the G8 summit to discuss exactly this issue. Better late than never," he says.
1320 European stock markets have recovered sharply in response to the interest rate cuts by the central banks. London's FTSE erases earlier losses and rises 12.61 points, or 0.27%, to 4617. Germany's DAX climbs to 5,262, 1.21% down on Tuesday. The French CAC index is now down only by 0.29% or 10.74 points. Meanwhile, the US Standard & Poor's 500 futures index is up by 17.2 points, or 1.68%. Dow Jones industrial average futures are up 23, or 0.24%, and Nasdaq-100 futures 13.8, or 1.02%.
1319 UK mortgage providers drop the cost of their home loans following the emergency cut in UK interest rates. Halifax says it will be reducing its standard variable rate (SVR) from 7% to 6.5% from 1 November. Lloyds TSB, which also lends under the Cheltenham & Gloucester brand, says it will cut its SVR by half a percentage point to 6.5% on the same date.
1317 These are strange times indeed. George Galloway has just praised the chancellor for his "admirable" actions. The maverick former Labour MP calls for the taxpayer to be given a seat in the boardrooms of the banks, quoting Tony Blair's famous speech after the 9/11 attacks in which he spoke of reordering the world while the pieces of the kaleidescope had been shaken. Mr Darling welcomes this unaccustomed praise but dismisses Mr Galloway's point.
1315 Also in the Commons the ex-Tory leader Michael Howard calls for a leak inquiry after "highly improper and probably illegal" briefings - presumably a reference to BBC business editor Robert Peston's recent reports. Mr Darling says he does not accept the former Tory leader's argument.
1313 Concerns have been raised by MPs about local councils in England which may have invested in Iceland. Mr Darling replies to the point about local authorities, saying they are a "more informed investor" than ordinary customers of the Icelandic banks but the situation is "evolving".
1312: Away from the UK, French President Nicolas Sarkozy says co-ordinated action between governments and central banks is the only way to confront an "unprecedented financial storm". He calls for an enlarged G8 meeting to tackle the crisis. China's central bank reduces interest rates by 0.27 percentage points to 6.93%, its second cut in less than a month. It also announces that the government is increasing the pool of money available for lending by reducing the amount banks must hold in reserve.
1303: By e-mail:
"No mention of the ordinary working people who put their hard-earned money into pension funds and ISAs. Do the government not realise when people learn how much they have lost this will take years to fix? I'm left thinking I should have bought a safe and hoarded the cash myself. Very let down, very disappointed, very dismayed" Bill, UK
1301 It has been Lib Dem treasury spokesman Vince Cable's turn. He starts by revealing that eight London councils have large holdings in the failed Icelandic banks, saying it will need immediate action. On to the larger point, the Lib Dem deputy leader asks for assurances that the money will be there in banking system when wages have to be paid at the end of the month. Moving into more familiar Cable territory, he mocks the government's sudden conversion from champions of the bonus culture to advocates of a "1970s-style incomes policy". He then turns his focus to the housing market and calls for new court procedures to ensure repossession is the last resort for those in trouble with their morgtages. And he calls for a new cash injection into social housing.
1300: By text:
"Why can't the taxpayer give £50 billion to pay everyone's mortgages off instead of bailing out the banks? Why help the minority who got us in this mess and not the majority? Wipe the slate clean and start a fresh banking system regulated with transparent scrutiny. " Scott, London, UK
"How do building societies and banks like Abbey fit into the bank rescue plan, if at all?" A K, Surrey, UK
1259 Mr Darling rejects Mr Osborne's criticisms of the FSA, saying he did not want to go back to the days when there were eight or nine regulators "tripping over each other" but, in a partial nod to the Tories' policy of handing banking regulation back to the Bank of England, he says the BoE "should have a statutory role in ensuring bank stability". He had already announced this in February, he adds, in case anyone thought it was a new development.
1258 There will be a further statement on Iceland later, says Mr Darling, but he says he had to act to tell people there money would be guaranteed because getting information out of that country was proving very difficult. He did not want people going to Reikjavic in search of their money.
Shadow chancellor George Osborne begins his response with some supportive noises. But he is quickly on to detailed questions about how the plan will work - and if taxpayers and small businesses are getting a fair deal. He also repeats David Cameron's call for a freeze on the bonuses of senior executives of the banks targeted by the rescue plan. He also quizzes Mr Darling about the Icelandic banks - and asks if UK depositors in banks in other countries will be protected. And he calls for long-term reform of banking regulations, to give the FSA more power to monitor debt levels. He also asks about international action and asks whether the UK economy is heading for a recession.
1247 He is now talking about the three failed Icelandic banks. On Icesave, he has guaranteed no UK depositor will lose out and he says he has taken steps to freeze the assets of its parent company Landsbanki in Iceland.
1246 Mr Darling says the government will be looking at the banks' executive pay and its treatment of homebuyers.
1241 Northern Rock has paid back half of the £30bn it gave to Northern Rock, ahead of schedule, says Mr Darling. He is trying to reassure MPs that taxpayers will get their money back from today's package.
1242 With its £250bn guarantee, the government will "stand behind" banks who want to issue new debt - and because it will be priced on commercial terms the taxpayer will benefit, Mr Darling tells MPs.
1241 Back in the Commons Mr Darling says there will be a short-term injection of £200bn into the banking system, to keep funds flowing. He is setting out in detail how the government's recapitalisation fund will work. He says it will put the banks on a stronger footing and more willing to lend to consumers and businesses.
A quick catch-up away from the Commons: The US Federal Reserve, European Central Bank (ECB), Bank of England, and the central banks of Canada, Sweden and Switzerland have all brought in emergency interest rates cuts of half a percentage point. The Fed cut its base lending rate to 1.5%, the ECB to 3.75%, and the Bank of England to 4.5%. Japan says it supports the reductions, but it is not following suit as its benchmark rate is already low. In a statement the US Federal Reserve said: "The pace of economic activity has slowed markedly in recent months. Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit."
1235 Setting out his proposals, Mr Darling says his aim is to protect bank depositors, safeguard the interests of taxpayers and contribute to the international response to "these extraordinary times".
1234 Mr Darling begins by saying the surprise half point interest rate cut will help the government rebuild the banking sector.
Mr Brown ends the session to loud cheers from Labour MPs. Alistair Darling is now beginning his Commons statement to MPs.
1232 Mr Brown says his phrase "the age of irresponsibility" referred to behaviour in the markets. He seems to be ending the session in a good mood, even venturing a little joke about the non-partisan mood coming under strain.
1230: By e-mail:
"Gordon Brown took credit in the good times when everybody was spending like mad, all funded by credit encouraged by him. Now it's all gone wrong." Nick, UK
"Why did Gordon Brown allow banks to reach this situation?" Susanna, Suffolk, UK
"What measures are we taking to try and stop all depositors moving their money to the safe havens in Ireland, Germany and Greece? Our Government should equally ensure that all deposits are guaranteed to minimise any risk of depositors removing their money out of the UK."
Joan, Glasgow, Scotland
1226 Tory MP Angela Wilkinson asks if Mr Brown shares her disgust that banks are charging 15% interest rates to some small businesses. Mr Brown says he is looking at ways of making banks "better intermediaries" at getting funds to small business.
1225: Nick Clegg chooses a colourful turn of phrase when pledging his support... he says that when you are getting the lifeboats out it's no time to be arguing about who steered the ship into the iceberg.
1224: Gordon Brown says the decision by the UK, US and other European countries to cut interest rates simultaneously is an "important signal" that the international community is prepared to take co-ordinated action to address the global financial crisis
1223: Lib Dem leader Nick Clegg says we are seeing a "day of reckoning" for the British economy but he says his party "wholeheartedly" supports the government's bank rescue package.
1220: More on executive bonuses. David Cameron says there should no bonuses this year for executives at banks who have taken the most risks. Gordon Brown says financial regulators will take bonus policy into account when setting new guidelines for how much capital banks need.
1219: By e-mail:
"I'd like to hear some ideas, backed up with proper cost-benefit analysis, for resolving the current economic situation." Megan, Cheshire, UK
"I work all the hours God sends to pay my bills, feed my family, pay my mortgage. I get no help financially. Can you explain to me why £50 billion of people's hard earned money - including mine - has been given to a group of banks who cannot keep their affairs in order? Nobody bails me out when I am in trouble." Craig, Wolverhampton, UK
"Well, at least the government is taking some actual action! I'm not sure anyone knows whether it will work or where we will end up." Herman, Reading, UK
Mr Cameron raises the question of big bank bonuses and "rewards for failure". Mr Brown says he wants to reward responsible risk taking and end irresponsible risk taking. The FSA will shortly publish proposals on regulating bonuses, he says.
1212: The real test is not whether banks will lend to each other but that they will also keep lending to small businesses and homebuyers, says Mr Cameron. Mr Brown says the government will do everything it can to keep credit lines open - and makes a pledge that the government will speed up payments of money it owes to small and medium sized businesses.
Tory leader David Cameron strikes a non-partisan note with his first question. He calls on Mr Brown to back the banking system, which he says "cannot be allowed to fail". Mr Brown welcomes Mr Cameron's support and says the government's measures are more comprehensive than predicted in the press and should ensure stability.
Back in the Commons, the Labour veteran Gerald Kaufman calls for City fat cats to be bashed - Mr Brown says the government's rescue plan includes a stipulation that excessive risk taking will not be tolerated.
1205 The interest rate cut comes a day ahead of the scheduled end of the regular meeting of the Monetary Policy Committee. Its timing is a big surprise, and will be welcomed by the TUC and CBI, presumably, given their calls for a cut.
1203: The PM opens the session with a tribute to those British troops who have lost their lives. He then tells the MPs that the governor of the Bank of England has just announced an immediate half a percent cut in interest rates in a "coordinated international action".
1201 The Bank of England has cut interest rates by 0.5%.
BBC Political Editor Nick Robinson predicts a sombre tone for PMQs, as if the country is at war. The thing to watch out for is the lone voice from the backbenches, who might say "just hold on a second…" he says.
1159 Where has Douglas Alexander been lately, asks Daily Politics host Andrew Neil, has he been in hiding? Mr Alexander sticks to the script, talking of the importance of keeping lines of credit open for business etc, before heading off to the Commons for PMQs. The Commons chamber is packed, as MPs gather for the main event at mid-day.
Stock markets around the world are continuing to trade lower. At one point this morning, France's main share index was down more than 8%. In Germany, where the government has taken action to shore up confidence in bank deposits, the main share index dropped 5%. The unease was not confined to Europe. Shares fell more than 9% in Japan, 6% in Hong Kong and were down 8% at one point in India. Markets also fell in China and Australia
1152: Politicians are not the answer to this crisis, says Lord Digby Jones. That's easy for him to say as a man who has just quit politics. He says it has to be a coordinated effort with the markets and business.
1149: Douglas Alexander to the rescue. The international development secretary repeats the government's line that Britain is well placed to weather a downturn and the government has taken the right course to deal with "unprecedented" international circumstances. Tory Philip Hammond accuses him of being "complacent" and warns Britain is in a worse place than other major economies because of the level of its borrowing.
1148: Yes, we are heading for a recession, says recently departed trade minister Lord Digby Jones. There is a crisis of confidence and no amount of government money will change that, the former CBI chief tells the BBC's Daily Politics.
1147: Shadow chief secretary to the Treasury Philip Hammond says the Conservatives broadly support the government's rescue plan, subject to certain conditions. The Tories want to know what assurances the government has received from the banks that lending to business and homeowners will start again and that taxpayers will get their money back, he tells the Daily Politics.
1145: All eyes now turn to the 30 minute prime minister's questions session in the House of Commons at noon. Both the Conservatives and the Lib Dems have said they will back the £50bn rescue package. They are anxious to avoid accusations of playing politics at a time of national emergency. But Mr Brown is expected to face tough questions about his handling of the economy in the run up to the crisis and whether taxpayers will get their money back. Mr Darling will then give more details of the plan, and face questions from MPs, in a statement that will last for about an hour
1140: By e-mail:
"The package announced today should work in theory, but in practice it won't. This is because there is no longer any trust in our financial systems or this discredited labour government. Brown and Darling's years of spin, lies and stealth have finally caught up with them!" Rob, Ivybridge, UK
"I am furious! The banks should be nationalised and the incompetent fat cats fired. The bubble has burst on these overpaid bankers. Time to pay the ferryman!" David, Swindon, UK
1137 Bank chiefs have lined up to welcome the rescue package - but some said they were already strong enough not to need taxpayers' help. HSBC and Standard Chartered explicitly ruled out taking part in the recapitalisation scheme, while building society Nationwide said it was "not under any capital pressure". Others such as Royal Bank of Scotland and Barclays have said they would join in certain parts of the rescue, while Lloyds TSB, which is buying Halifax Bank of Scotland, said it was assessing the implications.
Newspapers have been reacting to the rescue package. The Financial Times described it as a "momentous moment" in British politics and noted the broad support of the Conservatives and the Lib Dems showed that "normal politics had been suspended". The Guardian said the scale of the plan suggested ministers would insist on a crackdown on executive pay as a price for their intervention. The Times said that if all went well the taxpayer could make a "tidy profit" but said City experts believed a blanket guarantee on bank deposits may also be needed. The Daily Telegraph said the PM had sent mixed messages on the security of bank deposits, intervening on behalf of British customers of Icelandic banks but not pledging a 100% guarantee for all savings. The Daily Mail said the PM was "desperate" not to portray the rescue as a "crisis measure", adding that the plan could cost taxpayers up to £16,000 each. The Wall Street Journal, meanwhile, described the plan as "bold" and said it was designed to end fears about the "viability of individual institutions".
Political parties must come together to save the British economy, says Lib Dem leader Nick Clegg. But - in a possible taste of the line of questioning we can expect from him later at prime minister's questions - he calls for interest rate cuts and tax cuts for low and middle income families and an international agreement on new banking regulations.
1120: How long will it take for the banks to start lending again? That will be the acid test of today's package, says the CBI's John Cridland on the BBC News Channel, but it will all be lost in the "background noise" unless the Bank of England cuts interest rates by at least half a percent on Thursday. Consumers must be given the confidence to begin spending sensibly again, he says.
1110: The TUC is also calling for interest rate cuts and refrm of the banking sector. General Secretary Brendan Barber says: "It is vital that the vast sums of taxpayers' money are used to change bank behaviour, not just bail them out. Fat cats must be put on a strict diet. They must start to lend to business again, and they must cut the cost of borrowing."
1100: The CBI adds its voice to calls for an interest rate cut. Director General John Cridliand welcomes the government's rescue package - particularly Mr Brown's reassurance that it will keep lines of credit open to small and medium sized businesses, seen as essential to stave off job cuts - but adds: "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."
1053: The Taxpayers Alliance, the pressure group which campaigns against government waste, is a rare voice at this stage not supporting the plan. The group, whose backers include some high profile Tory donors, says "the government is using taxpayers' money as an easy way out and haven't fully explored other options that don't put £50bn of our hard-earned cash on the line" and urges moves to stop the cash being "frittered away on excessive bonuses" and calls for better regulation and an interest rate cut.
1055: An update on how the banking sector has responded so far on London's stock market. Shares in HBOS, which nosedived on Tuesday, are 40% higher after Lloyds TSB said its proposed acquisition was back on track. Royal Bank of Scotland (which includes NatWest) was 12% higher but other banks were down as they await further details from the chancellor. Shareholders face seeing their stakes diluted and their dividend payments cut, although the prospect of an interest rate cut on Thursday should soothe investors's nerves. There's still a lot of detail about the rescue plan to emerge.
1042: A comment posted on Nick Robinson's blog:
"How do the gruesome twosome get away with it? What they have announced is an 'investment'. So why does the PM only talk about taking advantage of the 'upside'. Surely the whole point with investments is that they're not guaranteed, and there is an obvious and associated potential downside too" neiljhuz.
1038: The Royal Bank of Scotland has said it will not be overhauling its management in return for getting potentially huge sums in public funding. The bank, whose senior executives have been criticised for running up big losses in the past year, said management changes were not "a feature" of its discussions with the Treasury. Earlier, Alistair Darling said changes at RBS were not a precondition of it receiving public money and management issues were a matter for the firm's board and shareholders only.
So if it taking a stake in the biggest banks is such a great idea, why didn't they do it years ago? That was the question Nick Robinson asked at the press conference earlier. He explores some of the answers in his blog entry.
1021: The government's plan gets the thumbs up from the Lib Dems. Spokesman Jeremy Browne says it has taken the "right" action to ensure the banks can function again. He also called for a substantial interest rate cut to kick start the economy and get people borrowing again.
1017: "If this does not work, this government is pretty much sunk," says the BBC's Landale. Mr Brown has staked his reputation on being the man to see the country through tough times. If it fails, he will find it very difficult to carry on.
1015: The BBC's James Landale describes the rescue package as " big throw of the dice" that "simply has to work" for the sake of the economy and the government. The message Brown and Darling were trying to get across is that the package is comprehensive - and that there are strings attached. But there is still a question mark over what action it will take on bonuses. Mr Darling described suggestions the government should cap them as "ridiculous".
It is also worth noting that when asked how far we were through the financial crisis, Mr Brown was less than specific - saying only that it was a "long haul".
1011: The overall message from the press conference seems to be that the recovery plan will be funded through increased borrowing but taxpayers will get their money back in the longterm. Mr Brown told reporters: "This support is on commercial terms. We expect to be rewarded for the support we provide."
1010: The government's rescue package for the banking sector have failed to calm the markets so far. The FTSE 100 index of leading shares is down about 5% amid concerns about whether the government package would be enough to resolve the current crisis. Shares in the banks likely to access state funding were largely weak. Royal Bank of Scotland shares fell 8%, Barclays shares fell 9% while shares in Lloyds TSB and HSBC also dropped. However, shares in HBOS rallied strongly, gaining 28%.
1007: Treasury officials are now briefing people about the plan. The next scheduled appearances from Brown - and Darling - are in the House of Commons, with prime minister's questions at mid-day, followed by Mr Darling's statement.
1002: The duo look pretty relaxed now, sharing a joke about a misheard question and then it's all over, the press conference finishes.
1000: From BBC political correspondent David Thompson:
Gordon Brown had to achieve three things with his press conference this morning: reassure the markets the government had a cogent and well-funded scheme for shoring up the banking system, reassure taxpayers they wouldn't be left out of pocket, hence his insistence that "there will be strings attached and conditions to be met", and reassure everyone that this package would work.
Did he succeed? Well, the FTSE rallied - a bit - as he was speaking, it emerged during his press conference that the bailout would be in the first instance funded by borrowing and as for the the last bit? Let's wait and see.
0959: Mr Darling says he is announcing the basic principles of the plan today - he will begin detailed talks with individual banks later. The government will not regulate banking bonuses - the FSA will deal will that, he says.
0958: Britain is putting forward a Europe-wide plan to beef-up regulation of the banks later on Wednesday and Mr Brown believes there is some support for it. Mr Darling says it is "patently obvious" this is an international problem and he calls on the G7 to take a lead on boosting stability across borders.
0957: Away from the press conference, the Conservatives and Liberal Democrats have backed the plan as outlined. We'll find out more details of any concerns they have at noon during the PM's questions clashes in the Commons.
0954: By e-mail:
"The government is responding in a wild manner and not following economic principles." Artwell, London, UK
0953: Why did Britain not follow the US Paulson rescue plan? Mr Brown says he wants to restructure the banks rather than just taking one aspect of their business, the "toxic debt", out of the system.
0952: By e-mail:
"The government cannot be allowed to bail out IceSavers. I'm sorry for those who have money in the failed bank, but you chose to invest in a foreign country." Russ, Cambridge, UK
0951 Mr Brown is asked if he would apologise to the British people for the chaos of the past few days? No, is the answer. "You have got to get a restructuring programme right." It would have been no good to bring it out in instalments, he says.
0949: The D word. Have they "dithered" over this rescue plan? Mr Darling takes this one. The government needed to time to work through the complex negotiations. The speculation about it had not been helpful, he says. "It was right to take the necessary time to get the thing right," says the chancellor. Mr Brown says, again, that it is a far more comprehensive plan than people expected.
0945: This is definitely not nationalisation of the banks, says Mr Darling: "We are not seeking to take public control of these institutions." It is a "completely different proposition". The government is taking a shareholding - and the banks can choose to draw on the £50bn fund if they want to. They can also raise money elsewhere, he says.
0943: Mr Brown wants other country to follow Britain's lead by restructuring their banking sectors. He keeps stressing that this is not a short-term measure to maintain lending, but a much bigger programme to put the banking system on a sounder footing for the future.
0942: Mr Brown is accused of trying to walk away from the wreckage of the financial system he created "smelling of roses". Now is not the time to talk about the past, says the prime minister. The government has taken "radical" action, he adds.
0940: "These are more radical proposals than people expected," says Mr Brown because the government wants to restructure the entire banking system, not just provide a short-term bail out. The government is also getting tough with the banks over executive pay and bonues, Mr Brown assures reporters regulation. "There are strings attached" to the the rescue package.
0935: Asked why the government won't guarantee everyone's savings, Mr Brown sticks to his previous form of words to say that the government has always protected savers.
0933: So, adds Robinson, the government is making a vast investment on behalf of taxpayers - if it is such a great idea why did they not do it earlier? The chancellor says they are doing it because it is necessary to stabilise the economy.
Where will the money come from, asks BBC political editor Nick Robinson at the press conference. Mr Brown says the government is buying shares in the banks and taxpayers will get the "upside". It is commercial lending - it is "not the American scheme". Every family benefits from the " the stability of the banking system," adds Mr Brown.
0931: By e-mail:
"The government have done all that they can. It is now for banks to do what they are (supposedly) good at and make this work." Naden, Horsham, UK
"I hope we have learned our lesson - free markets must be managed by the State. Nationalise the Bank of England now because I insist that I have a vote on how my country's finances are run." Saffie, Ipswich, UK
It is Mr Darling's turn now. He will be making a Commons statement at 1230 immediately after PM's questions. The rescue package is just one part of a range of measures the government is taking, he says.
0928: Mr Brown, speaking in Number 10, says the government expects to provide a total of £250bn in guarantees to the banks. The government is taking legal action against the Icelandic authorities over the losses suffered by British savers. Credit lines to small businesses will be kept open. Taxpayers will not lose out and could gain: "We will insist that the taxpayer gets appropriate reward from the upside."
The prime minister starts by talking about how the financial contagion spread from America. These are not normal times, says Mr Brown. "This is not a time for conventional thinking or outdated dogma."
0922: The Darling and Brown show is underway. Brown strides in with confidence and starts talking about the "bold" solutions unveiled today.
0920: Bad news from the markets. Mr Darling's rescue plan has failed to lift the gloom - the FTSE 100 fell 6.8% on opening. All banking shares have fallen, with the exception of HBOS which is up 16%, the only gainer on the FTSE 100 index.
I'll be keeping this page updated with all the key developments during the day. I'll also be including reaction from BBC correspondents, City experts and the pick of your thoughts on the day's events. You can text on 61124 (UK only, usual charges apply) or email our Have Your Say debate.
0904: Prime Minister Gordon Brown and Chancellor Alistair Darling are due to give a news conference within the next ten minutes or so to spell out more details and to answer questions on the plan.
0901: In Westminster the big event at noon is Gordon Brown's first prime ministers' questions of the new Parliamentary session. He is in a much stronger position than he was at the start of the summer break, having seen off his the rebels in his own party (for now) and reshuffled his top team. But the economic crisis is set to dominate the event. Will he guarantee all savers' bank deposits? Is it time to widen the remit of the Bank of England so interest rates can be cut? Why should taxpayers bail out the banks?
The story so far: With the financial system apparently teetering on the brink, the government steps in to part-nationalise Britain's biggest banks. All eyes will be on market reaction to Chancellor Alistair Darling's £50bn rescue package. Has he done enough to halt the slide in share prices and restore some stability?