London - In Britain, the NICE decade, defined by Bank of England governor Mervyn King as one of "non-inflationary constant expansion" - has come to an end with a bang.

The government bailout of cash-starved banks - the biggest-ever fundraising effort undertaken on behalf of the country's proud banking sector - is seen as the end of an era in the City of London where the free market reigned supreme and regulation was poor.

It was that spirit, unleashed by the liberalization and free market policies of Margaret Thatcher - and carried on by Labour governments - that allowed the City to boom and attract global banks and investors to London as the primary trading place in Europe.

But now the party is over, Prime Minister Gordon Brown made clear Monday. The British government would prove to be a "rock of stability" for savers, small businesses and homeowners while there would be an end to "rewarding failure" through hefty bonuses in the City.

"We are now paying the price for creating the illusion of wealth when we were creating nothing more than a pile of debt," the Daily Telegraph's business editor, Damian Reece, said in a comment.

As Britain entered a "new economic reality" with a part-nationalization of banks, and an impending deep recession, the influence of its own weakened banks would decline as "cleaner banks," such as Spanish giant Santander, would become a dominant force.

There will be little time for Britain's banks to nurse their hangover from the parties of the NICE decade, experts believe.

The restoration of competitiveness, once a main attraction of the City of London, would be a prime task - along with the obvious priorities of re-establishing trust and making credit flow again.

However, some analysts predicted Monday that the government's emergency cash injection, with an upper limit of 50 billion pounds, might have to be raised to 75 billion pounds in the near future.

Critics have warned that the government's actions, driven by events, could prove to remain largely ineffective as long as banks failed to reveal their "true exposure to bad mortgage debt."

The bailout scheme, which sees the government take a 60-per-cent majority stake in the Royal Bank of Scotland, and a 40-per-cent stake in a newly-merged Lloyds TSB/HBOS "superbank," also whittles down to four the number of top High Street banks.

Barclays has said it will not make use of the government funds and raise 6.5 billion pounds from shareholders, and HSBC has stocked up its capital independently.

The government already controls two significant mortgage lenders, Northern Rock and Bradford & Bingley.

The government says that banks benefiting from the cash move will be run on a commercial basis at "arm's length" from the government which will have a say in appointing directors.

There will be no bonuses for top executives and banks will be instructed to prioritize hard-pressed small-and medium-scale businesses and mortgage applicants in their lending decisions.

But, while the government has won much praise for its robust intervention, there are warnings that spending cuts, tax rises and renewed borrowing will be an inescapable consequence.

The gravity of the crisis, analysts believe, is underlined by the fact that 9 per cent of Britain's gross domestic product (GdP) is derived from financial services, and that the bank bailout equates to 4 per cent of GdP.

Officially, government debt in Britain is currently at the level of 560 billion billion pounds, equalling 37.3 of GdP. The bank rescue scheme raises the debt ratio to 41 per cent - above the government's self-proclaimed "golden rule" of keeping debt below 40 per cent. (dpa)