New 'Cobra' unit will tackle economic crises

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It will be similar to the Government's "Cobra" unit that meets during national emergencies - treating the credit crunch as seriously as a major natural disaster or act of terrorism.

Led by the Prime Minister, the group will meet regularly to identify dangers like failing banks and coordinate a rapid response. During major crises, like this week's uncertainty about the US rescue package, it could meet daily or even several times a day.

Regular members will include Chancellor Alistair Darling, his deputy Yvette Cooper and Business Secretary John Hutton. They will be joined by senior economists and civil servants.

Gordon Brown is planning to announce the group when he holds his Cabinet reshuffle. Cobra - short for Cabinet Office Briefing Room A - is the ad hoc group of ministers which forms after events like the London bombings or last year's flooding.

Ministers were breathing a sigh of relief today after the passing of the US rescue package by the Senate, but a serious row was developing in Europe over the Irish government's decision to guarantee all bank deposits. Britain and other countries expressed concern that the Irish deal could break single market rules and result in a flood of capital from other countries seeking safe haven in Dublin.

The European Commission said it was "in close contact" with the Irish and called for stronger central supervisionof government-led guarantee schemes in future. Spain's economy minister was today reported to be planning to increase the guarantee limit on deposits unilaterally unless the EU struck an international agreement. However, Pedro Solbes would not copy the Irish policy of guaranteeing deposits in Irish and not foreign-owned banks, said Madrid sources.

Separately, the EU has cleared the nationalisation of the Bradford & Bingley.

The British Bankers' Association said that Ireland's move would undermine British banks. A spokesman said: "The extent of the guarantee has clear consequences for firms competing to win retail deposits."