Britain's central bank yesterday cut interest rates by 1 per cent in a bid to save the nation from a deep recession. The move followed October's 1.5 per cent base rate cut.

Almost all the media's attention has been on the impact on mortgage borrowers. They have almost cheered on the government as it piled pressure on banks and building societies to pass on the rate cut in full to borrowers – as the BBC reported today. Yet few have questioned the logic or the justice of dramatic interest cuts. Falling rates may be good news for people whom owe money. They are very bad news for savers, especially pensioners who may have a meagre income from their pension. And there are a lot more savers than borrowers. It's not as if home owners were suffering penal interest rates in the first place. Anyone who had a mortgage in 1990 will agree that rates of 5 per cent are far more affordable than the eye-watering 15.4 per cent that mortgages reached in Margaret Thatcher's last year as prime minister.

We're in danger of repeating all the mistakes of recent years. A brief recap. Britain went on a spending and borrowing binge. We saved less than ever. Banks and building societies became over-reliant on the money markets to fund their lending. The government went on its own spending spectacular, with far too less interest in whether the money was being well spent. Then disaster struck. We woke with a horrible hangover. The government's solution? Get out the cheque book. Accept a huge increase in the state's overdraft. (No penal overdraft charges here!) Invest huge sums to save Britain's banks. Lean on the central bank's monetary committee to slash interest rates.

But wait. How are the banks going to raise the money to lend if savers think they'd be better off putting the money under the mattress? How are we going to get back into the habit of saving if we're earning less in interest than the rate of inflation? And what makes Brown and Darling think that very low interest rates are bound to get the economy going again? The lesson of Britain in the 1930s and Japan in the 1990s is that they won't.

The really interesting question is not whether lenders pass on the rate cut in full to borrowers. It's whether they cut savings rates by more than they cut home loan rates. In other words, whether they widen their margins and increase their profits. If they do, Brown and Darling may fume. But short of taking day to day control of banks and building societies there's very little they can do. Judging by the way Brown allowed boom to turn to bust, we might be relieved they don't have that total control.