Is Gordon Brown cashing in on the markets crisis?

As the economic crisis deepened last Thursday, Gordon Brown was pictured with his eyes closed as he passed the portrait of a smiling Tony Blair on the Downing Street staircase. The Prime Minister could be forgiven for appearing to be deep in prayer after his risky £500bn bailout of British banks earlier in the week.

MPs are speculating that Mr Brown has performed what is known in American football as a "Hail Mary pass" – a desperate last throw of the ball up the field in the hope that it will rescue the team from defeat.

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The high-risk strategy by Mr Brown is a far cry from his cautious decision a year ago not to call a snap general election. But the financial crisis appears to have transformed him from a "dithering", "weak" Prime Minister into an authoritative statesman who is enjoying being at the centre of the global economic storm. His presentation in Paris today to the euro group of countries on the "British bailout model" underlines the sense that he feels he is the only person who can lead the world out of market turmoil.

In an interview with the Daily Mail yesterday, Mr Brown said, with apparent sangfroid: "I think we can safely call it a crisis now." Yet critics questioned whether Mr Brown was cashing in on the financial meltdown to boost his popularity after coming close to being ousted as Labour leader.

The PM has enjoyed a small but significant bounce in the polls since the collapse of Lehman Brothers four weeks ago. On Wednesday, he felt relaxed enough to joke that a mobile phone ringing was another bank going under. By Thursday, he declared diplomatic war on Iceland over its "illegal" refusal to pay back billions of pounds of British savers' money, using anti-terrorism powers to freeze Icelandic assets. Critics said he seemed to be milking the prospect of a "Cold War" with Iceland to boost his authority in the global crisis.

Vince Cable, the Liberal Democrat Treasury spokesman, said last night: "Gordon has had a very good week ... But last week will soon be forgotten when people find they are worse off."

Another Hail Mary move was the recall of Peter Mandelson, who will be introduced as a peer in the House of Lords tomorrow. The controversial reshuffle a week ago appears to have silenced Mr Brown's party critics for now, but the bad blood spilled less than a month ago cannot be forgotten that easily, some ministers warn.

A few weeks ago, the Cabinet Secretary Sir Gus O'Donnell was heard complaining about Mr Brown's shouting in No 10. And Downing Street emails leaked to The Independent on Sunday reveal that the PM became personally involved in a turf war between officials at No 10, who included his spin doctor Damian McBride and strategy chief Stephen Carter – both were moved aside in the reshuffle.

One email sent by a No 10 official at 16.03 on 23 July this year reveals that Mr Brown accused Nick Stace, a PR and campaigns expert brought in to Downing Street by Mr Carter in March, of leaking plans for the PM's economic relaunch to a newspaper. The email read: "Everyone knows it was Damian McBride that leaked the memo. [But] when Nick Stace came to work on Saturday, there was an email from GB: 'Did you leak this?' Stace has been locked out of the loop ever since."

As Mr Brown's stock has soared, David Cameron's has fallen. The Tory leader will launch a fightback tomorrow when he visits the Halifax HQ of HBOS, in line for an emergency takeover by Lloyds, to meet management and workers.

For Mr Brown, it remains to be seen whether his Hail Mary pass will end in triumph or defeat.

Is there anything to smile about?

No, it's all bad news:

* House prices are down 13.3 per cent over a year and are predicted to fall 25 per cent below their 2007 peak by 2010. Good news for first-time buyers, but only if they can meet the new, far more stringent, requirements of a sizeable deposit.

* Rising scale of government borrowing which had already broken the "golden rule" by exceding 40 per cent of Gross Domestic Product. Now, with last Wednesday's deal adding billions more, taxes may have to rise.

* Council tax rises likely if UK local authorities lose all the £1bn in Icelandic banks. Local tax could need to rise every year until 2033.

* Unemployment is expected to rise next year from 5.4 per cent to 6 per cent, and there are serious question marks over a number of firms employing large numbers of people.

* A financial black hole looms as the IMF says that Britain's banks have £110bn of "potentially risky debts", and the worldwide exposure amounts to at least $1.4 trillion.

It's not all gloom:

* UK growth is forecast by the IMF to fall by 0.1 per cent next year, and then, surprisingly, grow by 2.2 per cent in 2010.

* China and India could save the world form a Thirties-style Depression with demand from their still-vigorous economies.

* Oil sold at $147 (£86) a barrel in July, now it's $82. Good for drivers and transport, not so good for the environment.

* Food prices fell by 0.2 per cent in September for fresh food, and non-fresh by 0.3 per cent. That may not sound much but it means that they are now heading in the right direction.

* Death of the mad mortgage as lenders call a halt to tempting, but inevitably dangerous, offers such as Northern Rock's old 125 per cent mortgage.

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