What does the government's £37 billion taxpayer-funded bailout of Royal Bank of Scotland, Lloyds TSB and HBOS mean for savers and borrowers?

Worried savers have spent the last weeks searching for safety rather than investment returns, spreading large savings across different institutions to stay within the government's £50,000 guarantee.

Nationalised bank Northern Rock has been turning away customers while the state-backed National Savings & Investments has cut its savings rates after excess demand.

Savers have been spooked by the freezing of funds in Iceland's Icesave, where around 300,000 Britons have accounts worth some £4 billion.

"Savers need the reassurance that their money is safe and that they will get it back," said Darren Cook of online personal finance site Moneyfacts. "If the confidence is back then savers can start making prudent decisions about returns."

But return of confidence is also likely to mean a reduction in savings rates on offer, following last week's cut in base rates and as institutions return to the wholesale markets for some of their funding. Rates have already started coming down from the above seven per cent deals on offer recently, and in many cases good rates are now just available for six months rather than a year, Mr Cook said.

For borrowers there may be some easing of the tight restrictions lenders have put on mortgages, which have seen a wide differential emerge in lending rates depending on the amount of deposit that borrowers can provide.