Gordon Brown and Alistair Darling will begin an international drive today to persuade other countries to implement a British-style rescue package for their banks.
They believe that global action similar to yesterday's interest-rate cuts on both sides of the Atlantic is essential to tackle the economic meltdown because so many banks trade on the international money markets.
Mr Brown outlined Britain's plans yesterday to the leaders of the major European economies. He spoke to Nicolas Sarkozy, the French President, Angela Merkel, the German Chancellor, Silvio Berlusconi, the Italian Prime Minister, and Jose Manuel Barroso, president of the European Commission.
Mr Darling flies out today for talks in Washington with finance ministers and bank chiefs from the G7 group of the leading industrialised nations, followed by the annual meetings of the International Monetary Fund and the World Bank. Next week, the Prime Minister and the Chancellor will travel to Brussels for a meeting of the European Council that is certain to be dominated by the financial crisis.
Back home, Mr Brown will be hoping that yesterday's interest-rate cut will be well received by Britain's five million home owners who will benefit from the 0.5 per cent fall. About 4.2 million households with tracker mortgages will automatically benefit from the reduction in the official cost of borrowing, and a further 800,000 on standard variable rates may also benefit.
Halifax, Britain's biggest mortgage lender; Lloyds TSB and its Cheltenham & Gloucester brand; the Woolwich, which is Barclays' mortgage arm; NatWest, and Royal Bank of Scotland all said they would be cutting their SVRs by the full 0.5 per cent. Other major lenders appear to have been caught by surprise as the Monetary Policy Committee had not been expected to announce results of its rate-setting meeting until today. Most are expected to follow suit after the Government called on them to support lending to homeowners. If lenders pass on the cut in full it will knock around £47 off monthly repayments on a £150,000 mortgage.
Michael Coogan, director general of the Council of Mortgage Lenders, said: "All this decisive action augurs well for an improving market situation looking ahead, even though no one is pretending the tough times are over yet."
But Louise Cuming, head of mortgages at moneysupermarket.com, warned: "This is not a magic cure-all and we won't see the mortgage or the housing market bouncing back to where it was 18 months ago."
Interest rates: The good news
The 0.5 per cent interest rate cut will immediately put money in the pockets of the millions of people who have tracker mortgages.
Monthly savings are estimated at:
£31 on a £100,000 mortgage
£47 on a £150,000 mortgage
£63 on a £200,000 mortgage
£79 on a £250,000 mortgage
£95 on a £300,000 mortgage