BRITISH DECISION:The economic and political implications of the rift between the City and popular opinion will mark the landscape for a generation, writes Richard Gillis

"UNPRECEDENTED. Spectacular. And I think it will work." This was one leading analyst's initial response to the British government's £50 billion bank bailout on Wednesday.

The statement was broadly representative of opinion from within the bubble of the financial markets and media commentators. The view from the real world, however, is very different. "They got us into this mess, why are we paying to get them out" is the word from the high street and the factory floor.

And while Gordon Brown's gamble was aimed at restoring the confidence of the money markets, the reputation of the City of London in the country has never been lower.

The broader economic and political implications of this schism will define the landscape for a generation.

For now, analysts recognise that the sheer scale of the current interbank liquidity crisis required an audacious plan and real leadership from central government.

A genuine run on Britain's high street banks, which seemed a real possibility earlier in the week, would have turned a financial crisis into a full-blown economic one. This nightmare scenario seems to have receded and it is in this context that opinion has been forged.

"It's a decent deal, well put together," said David Buik, market analyst at Cantor Index, a view that was supported by most of his peers. "Exactly the right thing to do," said the man from UBS.

The response of the markets was muddied by the half percentage point interest rate cut announced within hours of the British plan. The FTSE 100 Index closed down 5.18 per cent on Wednesday and, generally, trading reflected a "flight to safety".

In this light, the part nationalisation of the banks - not that Brown is using the N-word - has played well.

The big question is whether the plan will work. There is scant precedent to offer an answer. Sweden's experience in the 1990s has been much quoted over the past week. Faced with a similar but much more localised financial problem, the Swedes also chose to part-nationalise the banks.

The outcome was that the taxpayer eventually got most of their money back in the form of dividends when the banks were reprivatised.

By comparison however, the British government's exposure to the banks may yet run to £500 billion, or £16,000 for every taxpayer in the country, a number that could skew the budget deficit for years. The big gamble is how, or how quickly, that money is returned to public coffers through dividends from the banks.

And it is here that the details become murkier. Given that the government is about to become a major shareholder, what influence will they exert on the management of the banks?

What can they do to police the bonus culture so loathed by voters and which appeared to be part of the quid pro quo between the treasury and the banks.

And by putting a ceiling on remuneration, will the City of London cease to attract the talent that has made it such a major financial centre?

These questions sit uneasily with the generally positive initial response to the bailout. Longer term, part-nationalisation goes against everything the City stands for. "It's very restrictive, dilutes existing shareholdings and restricts the management in terms of the powers it needs to expand the business when all is well," said Cantor's David Buik.

One thing seems certain, the light-touch regulation, enjoyed by the banks for so long, is at an end.

One analyst suggested the future shape of British banks would shift to that of public utilities, heavily regulated and unable to lend money funded by high levels of debt. In short, banks might start behaving like banks again.

For most people in the UK, whose livelihoods depend on the real economy, evidence that Brown's gamble is paying off needs to appear, and quickly.

The alternative scenario sees government drawing the deficit back through years of higher taxes and reduced public spending. In this context, the next general election, probably in 2010, could be a good one to lose.

Ironically, the personal stock of Brown and his chancellor Alastair Darling has never been higher. Suddenly Brown is cracking jokes. During a speech at an award ceremony on Wednesday night, he responded to an errant mobile phone like a nightclub comedian putting down a heckler, "Has another bank gone down?" he asked to much laughter.

Was that gallows humour? Or could it be the confidence of a man who feels in control for the first time in his short residency at Number 10?