At the end of last year, the Government announced a scheme - termed the banking bail-out - that it hoped would kick-start the economy by supporting banks during the downturn. It came at the same time as the Bank of England starting cutting interest rates in an attempt to reduce pressure on borrowers and businesses.

But despite these proactive measures, for most of us, little has changed. Mortgage borrowers continue to struggle with payment shock, rates on new loans have not come down significantly and house price falls continue with little sign of slowing. At the same time, savers are paying as headlines rates on fixed and instant access deals fall.

The economic outlook continues to look grim, with more job losses, businesses folding and a recession still very much on the horizon.

The Government has now unveiled a second scheme to help support banks, increase lending and, hopefully, revive the flagging economy. But will the measures announced by enough to beat the downturn and get banks lending again? And what impact will it have on borrowers, savers, Northern Rock and Royal Bank of Scotland customers?

The logic behind this "second banking bail-out" is that such debt is hard to value, as banks are not currently able to sell it through the normal avenues, making it hard for them to know how much money they have on their balance sheets to lend. As a result, banks have been storing up their finances and restricted new lending.

The insurance scheme should encourage banks to increase their lending levels, as they have a Government assurance of how much money they can expect to reclaim from the debts.

A second measure announced by the Government is the launch of a guarantee scheme for asset backed securities, a move recommended by Sir James Crosby in his investigation into how best to support bank lending to individuals and businesses.

Margaret Beckett was accused of being 'divorced from reality' yesterday after suggesting first-time buyers should snap up bargains amid signs of a property market 'upturn'. The housing minister even warned there could be another house price bubble in the 'mad rush' after mortgage lending resumes.

Houses lost nearly a fifth of their value in 2008, the worst fall on record. The average price dropped from £197,074 to £159,896 in 12 months, according to Halifax. Prices are already at levels last seen in August 2004 and experts warn further, equally large, declines are likely.

However, Today's announcement on bail out aims to help banks access funding from the wholesale funding markets, thus supporting new lending, by offering Treasury guarantees to high quality asset-backed securities, including mortgages as well as corporate and consumer debt. The aim behind this move, which will not commence until April 2009, is to re-open the wholesale money markets this enabling banks to increase their funding.

In addition, Northern Rock has agreed to ditch its plan to shrink its mortgage book by 60% and the Government has upped its stake in RBS to 70%.

In a statement, the Treasury says: "With the global economic downturn intensifying in the past two months, the Government is announcing a comprehensive package designed to reinforce the stability of the financial system, to increase confidence and capacity to lend, and in turn to support the recovery of the economy."

The move has been long awaited by the industry, with many commentators repeatedly calling for Government help to restart the mortgage markets and support banks. Despite the Bank of England cutting interest rates from 5% in October to the historically low-rate of 1.5% in January, there has not been any significant evidence to suggest that this monetary policy is doing enough to boost lending and the economy.

A report out today from respected forecaster the Item Club predicts a 22% fall in house prices over the next 18 months, on top of existing losses. The recent report shows that the number of sales per agent had hit its lowest level since the survey began in 1978.

The British Bankers' Association says the measures will improve banks' liquidity, which is key to the economic downturn. However, despite the Government 'coming good' and announcing these new measures, not everyone is convinced they are enough.

Vicky Redwood, UK economist at Capital Economics, says while it is a significant step, there are no magic solutions to the downturn. "These measures will take time to get off the ground. Only the bare bones of the schemes have been laid out, some of which will not be put in place until April. More importantly, even with the Government absorbing some of the losses on their most toxic assets, banks face huge amounts of recession-related losses in the next few years," she warns.

Redwood also criticises the measures as failing to tackle "the heart of the problem"; namely, that banks do not want to lend during a recession. With losses still hanging over their heads, banks may be tempted to cling onto their capital and shore up their finances, rather than up their lending levels immediately.

"It is clear that the Government has realised that the banking system will not start functioning properly again without more state intervention. Less clear is whether these measures, on their own, will be enough to kick-start lending."?

The Council of Mortgage Lenders (CML), which has been calling for Government initiatives to help banks cope with "bad" debts for more than a year, is hopeful.

It believes the Government guarantees should go some way to help to restart the securitisation market, allowing banks to sell mortgage and other debts to investors and raise funding for new lending.

Michael Coogan, director general of the CML, says: "At long last, the Government has announced a comprehensive and co-ordinated package of measures sufficiently large in scale to have an impact on improving the flow of new lending."

But Coogan adds that it is too soon to accurately assess the impact on lending levels: "As always, the devil will be in the detail and there will be a great deal to work through. No doubt, there may still be disproportionate impacts on some firms or some sectors from the latest measures, but overall this is a helpful package that we think is much more likely to help lending flow more effectively again than the steps that have been taken to date."

Certainly, borrowers should not expect to see much difference overnight.

A lot depends on how banks react to the measures.

David Breger, partner at HW Fisher chartered accountants, says: "On paper, this latest rescue package is good news for business and good news for homeowners and borrowers. The question, as ever, is will the banks pay attention to it, and if they do, how long before companies and consumers begin to benefit? Time is everything at the moment."

And Redwood says: "It is clear that the Government has realised that the banking system will not start functioning properly again without more state intervention. Less clear is whether these measures, on their own, will be enough to kick-start lending."

She predicts that the Government will need to go further over the coming months, potentially by nationalising more banks and setting lending targets for banks.

The fact that the guarantee schemes are not available to all mortgage lenders (with non-deposit taking firms and subprime lenders excluded) should also be a problem, says the CML.