While Conservative leader David Cameron may believe in Prime Minister Gordon Brown’s bank rescue plan, he has also made clear today that he believes that the Labour party’s economic strategy is a complete failure, and that he does not support this in any way.

After accusations that the Conservative party have agreed with the economic agenda up until recently, Mr Cameron has retaliated by giving a very public speech of his disapproval of how the country has been led into economic disaster.

He has accused Labour of hiding from the truth of their past policy failures, and that this has lead to the economic crisis that we are now facing that is affecting both people and businesses.

According to a speech given by Mr Cameron:
“We need change to mend our broken economy. This lot cannot do it – not least because they cannot own up to any mistakes.”

While it may be true that we are currently facing some serious economic problems, other political parties are also making it clear that they do not believe with the Conservative party’s decision to speak out against the problems in our economy, calling it the “worst kind of politics”.

Among his other accusations of the Labour party’s failures, Mr Cameron has argued that Mr Brown had embraced free market economics “without question” and without “properly understanding how it worked”.

Also that Labour had ignored warnings about borrowing “without restraint”, and that overall, over the past decade, our current governments failure to control public and private spending has lead to unsustainable  debt levels due to “intentional” disregard.

The idea that Labour had made false assumptions was a major component of the Conservative’s speech.  Including that Labour had tried to build a successful economy on a “narrow base of housing, public spending and financial services”.

Mr Cameron is suggesting that in order to hold ministerial spending, he would set up an independent body – the Office of Budget Responsibility, and wants to see tougher regulations of the banking sector, and changes to laws that protect struggling businesses, along with much more.

He is saying that Britain has become too dependent on property, and its financial services in order to produce our countries wealth, and has called for a range of new measures in order to create a more “balanced and resilient economy”.

Other political parties are also showing their lack of support for Mr Cameron over his speech, and accused him of “juvenile political games”, in order that he may on the news.

Other parties have said that he had “nothing of real substance” to say about our economic crisis and that the British people “want calm leadership and serious policies to get through tougher times”, and the Conservative party are not offering this.

Today’s US Dow Jones share index has been unpredictable to say the least, bouncing frequently between gains and sharp falls, and barely changing at all in early afternoon trading.

Investigations reveal that industrial production in September of this year has suffered its biggest drop since 1974, while inflation remains unchanged.

Statistics show that earlier today, Asian shares had dramatically fallen in Tokyo’s Nikkei by 11%, London’s FTSE 100 closed down 5.7%, France’s Cac 40 fell 5.9%, and many other changes.

This all comes after yesterday’s biggest one-day percentage fall since October 1987 of 8% down.

Other changes include:
• September’s US industrial production fell 2.8%

• In October, Philadelphia Federal Reserve’s report showed manufacturing conditions had weakened.

• Hong Kong’s Hang Seng fell 7.6% to 14,785.60

• India’s main share index fell 4%

• Australia’s main share index fell 6.7%

• After weekly US fuel reserves figures rose more than expected, causing oil prices to fall

• As effective from Monday, the Bank of England announced it would change the way it leant UK banks

• Germany reduced its prediction for economic growth from 1.2% to 0.2% for next year

It is thought however, that the hurricanes in the Gulf of Mexico and a strike at Boeing could partly be to blame for some of the fall in industrial production.

Chris Rupkey at Bank of Tokyo-Mitsubishi UFJ in New York has said that:
“It is a sign that the economy is falling away quickly, and it is certainly consistent with the recession that we seem to be in.”

As bank rescue packages proposed by the UK and European Union emerged, shares in the market rose at the beginning on the week. But now there are worries about how a prolonged economic shutdown could affect the rest of the economy.

The Japanese Prime Minister has suggested that the $700billion (£406billion to you and me) US bank bail-out package was too little and that the market will continue to fall sharply even after this effort.

It is worrying that the signs suggest that cash injections from central banks had not yet restored confidence in the banking sector, and banks are still not lending to each other at anything resembling the normal rate of interest relative to official rates. This means that they are even less likely to lend at better rates to customers and businesses.

According to AFP news agency, in an attempt to find solutions to this problem, Credit Agricole has struck a deal with eight mutual European banks to resume lending to each other.

As mentioned above, the Bank of England is also trying to help, by changing the way it is prepared to lend to them. Banks should be allowed to borrow overnight without any problems, and will be offering loans for up to 30 days with advantages including mortgages being acceptable as collateral.

In the biggest rise since 1991, the rate of unemployment has now hit 5.7% according to government figures, and it is expected that worse is to come.

As both the number of people in work, and the number of job vacancies both fall, the number of Jobseeker’s allowance claimants continues to rise. In September, it is thought that nearly 940,000 people claimed the benefit reserved for the unemployed, putting even more stress on the UKs currently fragile economy.

It also seems that the current inflation is not being reflected in wages. In the three months leading up to August 2008, annual earnings growth slowed to 3.4%, its lowest since 2003.

And it seems that worse is yet to come, as it is said that some economists predict that unemployment could reach two million by Christmas this year, and could be as high as three million in December 2009.

The Chartered Institute of Personnel and Developments Chief Economist, John Philpott is recorded to have said that:
“We’ll see hundreds of thousands of jobs being lost, and unemployment is likely to rise, certainly above two million. The question is how much further than that.”

Now the government has to find an extra £100 million in order to re-train, and give personal advice to workers that have lost their jobs, particularly through redundancy, due to the credit crunch.

The TUC are also demanding that other measures be taken to help the increasing numbers of people who will find themselves out of jobs, including increasing the statutory minimum redundancy pay.

The public sector is likely to be one of the worst hit areas, as nearly 10,000 jobs are expected to be lost in up to 100 courts in an effort to save money.

In aiming to save around £900 million over the next two years, the Ministry of Justice may have to make thousands of workers in prisons, probation and court services redundant and potentially close up to 100 courts.

In other areas, the Department for Work and Pensions has announced that they are to cut 12,000 more jobs, on top of the 30,000 already due to be lost, because of their budget cut of 5.6% over three years in real time.

Revenue and Customs is another area that is said to be cutting jobs again. It is expected that 12,000 more jobs will disappear, on top of the 17,500 already lost.

Official figures show that last month’s consumer prices hit yet another high, with the Consumer Price Inflation (CPI) rising from 4.7% in August, to 5.2% in September.

Increased energy prices are primarily being blamed for this raise, but analysts believe that this should be the peak of the inflation, as fuel prices finally begin to fall.

Not only did Septembers CPI show an increase, but also its Retail Prices Index (RPI) has hit 5%, compared to 4.9% a month earlier. This means that the government now has to potentially spend billions of pounds in order to increase benefits and pensions by either 2.5% or headline RPI in order to keep consumer financial help in line with these highly inflated prices.

Last week, The Bank of England cut its interest rates from 5% to 4.5%. Many other central banks around the world, including the Commonwealth Bank of Australia (CBA), have also decreased their interest rates by the same percentage, in order to help boost markets and prevent further inflation. The Bank of England at least, is also predicted to cut its interest rates a further 0.5% by the end of the year.

Other factors that are being blamed for inflation rising well above the government’s 2% prediction, include rises in food and energy prices, along with more expensive clothing, footwear, toys and games, all adding to the cost of living for everyone, especially families.

According to the Office for National Statistics, the annual rate of inflation for energy and household bills has reached its highest since 1989, at 15%. However, food inflation has eased recently, with a smaller increase than has been normal of late, from 12.7% to 14.5%. This is being attributed to a fall in the cost of dairy products such as milk. On the other hand, the price of meat continues to rise.

Now, it is worried that recession could potentially become more of a threat to the economy than the recent inflation.

It is predicted that, by Autumn 2009, is likely that inflation could be as low as 1%, and could possibly drop into negative figures, if the likes of oil prices continue to fall.

Jonathan Loynes, Chief European Economist at Capital Economics, has stated that:

“The key issue now is just how far and fast it will drop back as the food and energy effects which have pushed it up so sharply over the last year finally fade or go into reverse.”

The prime minister Gordon Brown has called on other governments to follow Britain’s lead by supporting their struggling banks.

The Labour leader wrote in the Times that the crisis needed a “global solution” and that he believes world leaders need to meet together to plan a restructuring of financial markets.

It comes as the chancellor, Alistair Darling, is in Washington meeting finance ministers from the G7 group of richest nations.

The FTSE 100 share index closed last night lower than any time since August 2004. The drop comes despite Wednesday’s historic rescue package for struggling banks, totally £500bn.

Mr Brown said that our banking system is fundamental to “everything we do”.

He said: “Because this is a global problem, it requires a global solution.

“Indeed this now moves to a global stage with a range of international meetings starting this week with the G7 and the International Monetary Fund and, we propose, culminating in a leaders meeting in which we must lay down the principles and the new policies for restructuring our banking and financial system all around the globe.”

Mr Brown added that it is “only through the boldest of co-ordinated actions across the globe” that families and businesses could be “adequately supported”.

Mr Darlings meeting in Washington comes after the Dow Jones in New York fell to its lowest level in five years, closing below the 9000 points barrier.

According to information from Economics and Business Research, the value of city bonuses in the UK is expected to fall this year by 58 percent, but it still forecasts bonuses of around £3.5bn will be paid out.

This morning the UK government announced details of a £50bn rescue plan for the British banking system. The extra capital will be made available to eight of the UK’s largest banks and building societies in return for preference shares in them.

Gordon Brown said that the rescue plan is “designed to put the British banking system on a sounder footing.” However the FTSE 100 in London fell 5 percent. HBOS shares rose 26percent but Barclays fell 11 percent and Standard Chartered dropped 13 percent.

The key points of the rescue plan are:

• Banks must increase their capital by at least £25bn and can borrow from the government to do so.
• An additional £25bn in extra capital will be available in exchange for preference shares.
• Short term loans from the Bank of England have increased from £100bn to £200bn.
• Up to £250bn in loan guarantees will be available at commercial rates to encourage banks to lend each other.
• To be involved in the scheme banks will have to sign an FSA agreement on executive pay and dividends.

Banks have been taking criticism for being unwilling to lend to each other, so the government hopes that if those loans can be guaranteed then lending will resume.

“This is beginning a process of un-bunging a big problem where banks won’t lend to each other for long periods,” Mr Darling said.

Barclays, HBOS, HSBC, Lloyds TSB, Abbey, RBS, Nationwide Building Society and Standard Chartered have all agreed to take part in all aspects of the scheme. The Treasury said that any other banks can apply to be included in the plan.

Preference shares pay a fixed rate of interest instead of a dividend, which has to be paid before other shareholders receive anything, but they do not carry voting rights.

Although taxpayers may end up making a profit from the shares, this is not guaranteed.

There is hope the deal will get the money markets moving again and assure the future of the banking system.

“They’ve got additional capital now if they want it, they’ve got an unlimited source of liquidity,” said Terry Smith, chief executive of the money brokers, Tullett Prebon.

“That certainly should stop the panic in terms of people wondering whether or not the banks are safe.”

The deal has also been welcomed by banks who have been feeling the pressure of late.

“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 said in a statement.

Barclays, Lloyds TSB and RBS also issued statement welcoming it.

The British Chambers of Commerce (BCC) has warned that Britain is already in a recession, which is worsening and could see unemployment rise by 350,000 by next year.

A quarterly survey of 5,000 businesses says confidence is at an all time low in both manufacturing and service sectors. The companies call for urgent action from the government and the Bank of England.

Technically, the UK is not in a recession – defined as two quarters of negative economic growth. However, the BCC said that the survey results were “exceptionally bad” and said the economy was under “immense pressure” for the second quarter in a row.

The BCC believes the number of people out of work will rise by between 300,000 and 350,000 over the next year or two, which would take the unemployment total to more than two million.

The BCC represents small to medium sized companies, and argues that a recession has already begun. It wants the Bank of England to do what it can to stimulate the economy, by cutting interest rates on Thursday.

“We are clearly in a very difficult economic period but it is important that we retain a sense of proportion,” said BCC Director-General David Frost.

“Many parts of the business community continue to perform well. The government needs to say that business taxes will be cut.

“The Bank of England needs to cut interest rates immediately and politicians need to get behind our businesses in these challenging times.”

The BBC’s business correspondent Nils Blythe says the idea of a rate cut is now supported by the majority of city economists, in spite of rising inflation.

The results of the survey come a day after the FTSE 100 fell 391.1 points, or 7.85 percent, to close at 4,589.2.

This meant that the UK’s top share index saw its biggest ever one-day points fall, wiping £93.4bn off the value of the index’s shares.

Gordon Brown is confident that the proposed takeover of HBOS by Lloyds TSB will go ahead amid concerns that Lloyds could renegotiate the deal after HBOS’s shares plummeted by almost 14 percent on Tuesday.

Robert Peston, the BBC’s business editor, said that people close to the deal had told him there was no way that Lloyds would change the terms of the deal.

At present, HBOS investors are to get 0.83 Lloyds shares for every HBOS share they own. But HBOS shares have been up and down over the past fortnight during which time they have lost over half their value.

At one point on Tuesday, HBOS shares fell by 26 percent, closing at 122.4p on Tuesday.

The prime minister spoke to Sky News, and said he was confident that the Lloyds-HBOS deal would go ahead. He was keen to stress that this was not a government matter but one “for shareholders”.

Mr Brown said, in response to whether the government would bail out HBOS were the deal to collapse, that the government had already “dealt” with this by helping the merger take place.

“We changed the competition law to make it possible,” he added.

When the deal was fleshed out it was worth £12bn. However, analysts are cautious about the deal actually taking place.

“The market is implying that [the deal] does not happen,” said Alex Potter of Collins Stewart.

But an HBOS spokesperson claimed it was “full steam ahead” and that it was “the right deal for HBOS shareholders”.

Lloyds said the deal was still on track for completion by the end of 2008.

“This is a fantastic opportunity to create one of the UK’s leading financial services groups,” a spokesman said. Lloyd’s shares closed 4.3% up on Tuesday.

HBOS entered into the agreement with Lloyds when its share price fell sharply, following the collapse of US investment bank Lehman Brothers. A deal between HBOS and Lloyds would create a business with almost a third f the UK’s mortgage market with some 3,000 branches.

The main UK and other European share indexes have dropped dramatically in early trading after a $700bn (£380bn) US financial rescue plan put forward by the Bush administration failed to gain Congressional backing.

Wall Streets Dow Jones index saw its biggest one-day point’s fall in history yesterday after the deal was surprisingly rejected.

The UK’s FTSE 100 index was down 0.9%, or 43 points, at 4,775, while France’s Cac 40 had fallen 52 points, or 1.3%, to 3,902. Germany’s Dax was down 1.7% or 100 points at 5,707, while Asian stocks have already seen big declines in Tuesday trading.

Baking shares were the biggest fallers in London, as concerns grow about how the delay in securing a rescue deal in the US will hit the financial system.

Newly rescued HBOS was down 12 percent, while its new owners Lloyds TSB dropped by 9 percent. Royal Bank of Scotland was 11 percent lower.

The shockwave has been felt across the world.

Japan’s Nikkei index ended Tuesday down 4.1 percent, and Hong Kong’s Hang Seng had lost 2.4 percent in late trading. In Russia, all trading has been suspended on the country’s two main stock markets.

The Republic of Ireland’s government announced that all bank deposits would be guaranteed for the next two years, and Franco-Belgian bank Dexia has received a state bailout, with the Belgian, French and Luxembourg governments pumping in a combined 6.4bn euros (£5bn).

The architect of the US rescue plan, Treasury Secretary Henry Paulson, said that it was vital to get a new deal agreed, adding: “This is much too important to simply let fail”.

US president George W Bush is due to make a statement on the deadlock over the bail-out plan later today, however critics say that the president has been ineffectual in the crisis so far so its difficult to see how that might change anything. Congress will not meet again until Thursday, with another vote unlikely before the weekend.

The House’s rejection of the bail-out plan came after a day of turmoil in the US and Europe, with Wachovia, the fourth-largest US bank, being bought by larger rival Citigroup.

The US rescue plan, a result of tense talks over several days between the government and lawmakers, was rejected by 228 to 205 votes in the House of Representatives.

About two-thirds of Republican lawmakers refused to back the rescue package, as well as 95 Democrats.

Mr Paulson said, after a discussion with the president, that the government’s plan to address the crisis facing the US financial sector was much too important to be allowed to fail.

He said that US regulators would use “all the tools available” to help the US economy, but warned that their powers were “insufficient”, he warned.  He believes something needs to be done “as quickly as possible”.

Analysts say that without a bail-out plan, the banks will be left to handle all their own bad mortgage debt as best the can and more of them will be in danger of going bust.

At the Labour Party conference in Manchester, Chancellor Alistair Darling is set to promise action over weaknesses in the financial system, pledging to avoid “knee-jerk” reactions, taking measured decisions for long-term stability instead.

His speech comes as financial experts say taxes will have to rise as borrowing soars.

In an interview with the BBC, Mr Darling was asked if income tax is likely to go up, instead of a straight “yes” or “no”, he replied: “it is not the time to take money out of the economy”.

When asked to explain his answer, Mr Darling said that the time to pay back debt was when the economy is doing better.

He added that at the moment, rather than increasing taxes, basic rate tax payers were paying less tax this month.

The chancellor will fly with the Prime Minister Gordon Brown from the conference to New York in an effort to establish an international agreement for tighter regulation of the financial sector.

On Sunday, Mr Brown told the BBC he was considering a crackdown on “irresponsible” City bonuses which encouraged risk-taking and a level he believes is “excessive”.

Mr Darling’s keynote speech should see him commit to taking whatever steps necessary to tackle turmoil in the markets, but he will also warn that solutions to the problems of globalisation will or be found by one government alone.

Mr Darling will say: “Just as one government alone cannot combat global terrorism, just as one government alone cannot deal with climate change, one government alone cannot deal with the impact of globalisation.

“In the next few weeks Gordon and I will be in the US and in Europe and speaking to finance ministers around the world to put in place measures to help prevent the mistakes and misjudgements which caused the crisis.”

In the meantime, unions are expected to use the conference to demand a windfall tax on energy firms to help households below the poverty line to pay their gas and electricity bills.

The demands for a levy will be spearheaded by Unite general secretary Tony Woodley; however, due to a rule change, unions and activists will not be able to force a vote on whether to make such a tax Labour Party policy.