I was quick to condemn Gordon Brown, the British Prime Minister over his handling of the credit crunch crisis in a recent business angel blog. I argued that the one thing businesses crave is certainty. I must say a well done to the British Authorities for their swift action this week.They have identified the root cause of the problem with the credit crunch in Britain, which is that the banks have stopped trusting each other in terms of making loans available to each other. Please have a look at one of the very first blogs I wrote - the credit crunch explained.

I am particularly pleased that Britain managed to achieve cross party support for the measures taken rather than the very divisive nature of the $700bn bail-out in the US last week. I think it is worth looking at the British solution and compare it to the US solution and hopefully I can explain why I am positive about the British solution.

On both sides of the Atlantic, Banks are sitting on assets which are worthless. These are so called ‘toxic’ assets. The banks are in a terrible mess because they cannot borrow money as their assets are worthless. The US bail-out involves the US taxpayer ‘buying’ these assets off the banks. The idea is that this will then enable the banks to cleanse their balance sheets and get going again. I think this is a very bad deal for the US tax payer. They have effectively been asked to buy ‘crap’. Hopefully, the money will get paid back to the taxpayer at a good interest rate.

The UK solution offers two key things. Firstly, rather than offering to buy specific assets from banks which are worthless - the UK government will be buying shares in banks at a hefty discount. This gives us (the taxpayer) a potential upside if the banks do recover (which I think they will). More importantly, what has really impressed me has been the solution which drives at the heart of the problem.

The UK Treasury has said that they will guarantee moneys lend between banks up to £250bn. This is a bold step and imaginative. It should see the money markets opening up and banks lending to each other again. We will find out very quickly if it has worked once we look at the lending spread. That is the difference between the interest base rate (which went down by 0.5% as well) and the rate at which banks will lend to each other. This rate has traditionally been wafer thin at about 0.15% but has recently been as high as 6%.

In life it is very easy to be critical. I think though that if you are going to criticize - you should also be generous with your praise. I think the government (helped by the opposition parties as well I must add) has done well.