In the end fine economic judgments were swept aside by politics, calm deliberation by panic on the streets. Never mind that investors in Northern Rock, Britain’s fifth largest mortgage lender, had been assured their money was safe. The television images of thousands queuing to empty their bank accounts the length and breadth of Britain were too much for Gordon Brown’s government. Signs that the contagion was spreading to other leading banks risked a crisis turning into a catastrophe. Only a blanket guarantee would do.

Such was the judgment that led to the extraordinary announcement last night that the Treasury is ready, in effect, to stand behind depositors not just in Northern Rock but in every other British bank. Government ministers – notably Alistair Darling, the chancellor of the exchequer – presented the guarantee as a prudent safeguard against the risk of systemic breakdown. In truth, the panic that had brought down Northern Rock was fast spreading through the corridors of power in Whitehall. Gordon Brown’s government has built its reputation on economic competence. Stability was Labour’s trump card in the three general elections fought and won by Tony Blair. As chancellor through that decade Mr Brown could claim much of the credit. This week’s scenes of anxious voters emptying their bank accounts, redolent of Latin America 20-odd years ago, threatened to sweep it all away.