Now we know exactly how much the financial turmoil in the money markets is going to cost us - a whopping £2,000 for each taxpayer.

There are two ways of looking at the Chancellor’s £50bn rescue plan to underpin the British banking system. The cynical view is that £2,000 is being swiped from our back pockets to pay for the profligacy and mis-management of financiers. The other view — and the one the government hopes is correct — is that we are investing in our own future.

By taking a stake in the banks and other financial institutions and by capping executive pay and shareholder dividends, the government has essentially part-nationalised the banking system. By using taxpayers’ money and record borrowings, the government is hoping to restore confidence in the markets and to provide the banks with the capital needed for their everyday activities. It is an attempt to kick-start the return to normality.

The Bank of England’s decision, along with other central banks around the world, to reduce interest rates by 0.5% is another mechanism for restoring confidence. That should mean cheaper loans and the restoration of some movement in the crucial housing market which has become stagnant in recent months. It will also make borrowing for business cheaper, although there are precious few companies at present considering investing or expanding. Indeed, the predictions are that unemployment throughout the UK is set to rise to more than two million as recession looms.

The government’s intervention model is something akin to that introduced with success in the Nordic countries in the 1990s when the banking system there neared collapse. By taking a stake in financial institutions and by suggesting better governance of them in future, the hope is that the public will buy into the scheme just as the major banks already have.

Such is the volatility of the money markets at the moment that even yesterday’s dramatic and unprecedented intervention by government, in agreement with the financial institutions, has not brought any sign of immediate stability or recovery. The markets are so nervous at the moment, that some people are

already asking what will happen if this plan does not work. The answer to that is no-one knows as the situation goes beyond the experience of practically everyone, everywhere. The government has begged and borrowed everything it can and the solvency of the country will be in question if the plan does not succeed. Even if it does work, there will still be hard times ahead. Having emptied the pockets of the taxpayer to shore up the financial sector, there is little money left for any improvement of public services. Even funding them at the current level may require some sleight-of-hand accountancy.

The fear is that taxes may have to rise as a result of recent events, although that is a step which an already unpopular government would be loathe to take except in extremis. Gordon Brown will be hoping desperately that this plan restores stability to the financial world proving his claim that this is no time for novice politicians to be taking the helm of government. Success could boost his standing in the country, but he would be foolish to bank on it.