British Rescue Plan Brings Collective Sigh Of Relief

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It's been one day since a multibillion-dollar rescue package was put forward by British Prime Minister Gordon Brown. Politicians in Britain warned Wednesday against measuring the success of the plan by looking at the stock exchange. Public reaction has been one of relief, although ordinary investors are angry that the banks are being bailed out.


Britain's public has had a night to sleep on the multibillion-dollar rescue plan put forward yesterday by Prime Minister Gordon Brown. It's a plan to save Britain's banks. And traders have also had time to think about it. British politicians have been warning against measuring the success of this plan by looking at the stock exchange. But for what it's worth, we're looking anyway. And Britain's FTSE Index is up today. NPR's Rob Gifford is on the line from London. Rob, good morning.

ROB GIFFORD: Good morning, Steve.

INSKEEP: What's the public reaction to this plan in Britain?

GIFFORD: Well, I think you could say there's been one large collective sigh of relief really. The newspapers this morning have - The Daily Telegraph led with the headline "Back from the Brink," although The Guardian used the headline "Staring into the Abyss" on its front page. I suppose you can, sort of, choose your cliff-top metaphor. But the newspapers, there's been a certain amount of dark humor as well. This being Britain, the newspapers love to take a dig at some of the politicians.

The right-leaning Daily Telegraph said this morning - led with an op-ed piece saying "We're all socialists now, comrade." So generally, I think, relief. The man on the street, a certain amount of anger as well that the banks are being bailed out. And very similar in that sense to the opinions in the United States last week to the Paulson plan.

INSKEEP: Well, since you're on the line, comrade, let me just ask, does everybody in Britain really understand is this socialism? Is it something less than that what the details really are of this plan?

GIFFORD: Well, the details, again, as with the Paulson plan, are very complex. There are big differences with the U.S. bailout, the government taking an equity stake, although that's a possibility that's being talked about in the U.S. That is actually a central pillar of this British plan. But the complexity of the situation is very extreme, and it's very - no one quite knows how much money is going to whom. I'll give you one brief example, as well, of the difficulty of working out this situation the government's having.

A lot of UK savers had money in an Icelandic bank. Who knew that people had money in Icelandic banks? Well, that bank is not giving them their money back. The government yesterday in the middle of all this said it would stand behind and guarantee that money for British savers even though the Icelandic bank - it was in Iceland. Now, overnight, it turns out a lot of local governments have money in Icelandic banks, tens of millions, perhaps hundreds of millions of pounds. What's the government going to do in a situation like that when it's just guaranteed for the individual savers? All sorts of questions like this are raising their heads.

INSKEEP: And we're remembering, of course, that Iceland has had massive financial trouble. And their prime minister is worrying about the whole country going bankrupt as they continue to seize troubled banks. And maybe we're understanding here also, Rob, why there was news yesterday that Britain is talking about suing Iceland over this crisis.

GIFFORD: Absolutely. There's all sorts of complex international relationships here between these economic leaders. We're seeing it in the rest of Europe as well, importantly. I mean, I think there was a feeling that Britain really was one of the worst economies because it was exposed much more than the European banks. But I think a lot of European leaders in continental Europe are now looking at what Gordon Brown did yesterday and wondering if they should be stepping forward to do something like that, and the fear that there could be something like an AIG or another big institution underneath the surface that could rear its head in the coming days.

INSKEEP: OK. Well, we'll keep listening to you for updates. That's NPR's Rob Gifford in London. Rob, thanks very much.

GIFFORD: Thank you, Steve

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