A day after Britain unveiled a multi-billion-pound fiscal stimulus package to spend its way out of recession, market analysts have been busy figuring out what it all means, in the context of a sharply slowing economy.

Nick Parsons, head of market strategy at nabCapital, has come to this conclusion:

“People need to spend less, not more, and though little Johnny’s Xbox is indeed 4 quid cheaper, his Dad’s house is worth £3.97 less every hour,”he wrote in his daily note.

“That’s every hour of every day, 24 hours a day and is not going to get in the slightest bit better as a result of yesterday’s budget announcement… Thanks to the VAT reduction, Easter eggs might be 10p cheaper next year but by then average house prices will be another £10,000 cheaper. Go figure.”

What price freedom? Or at least freedom from government interference?

Barclays needs to answer that question after selling big stakes to Middle East investors rather than tap taxpayer funds. The bank is effectively paying 13 percent annual interest for at least a decade, whereas it could have paid the UK Treasury 12 percent for a few years. Add in a whopping 300 million pounds in fees and the deal could cost shareholders as much as 3.2 billion pounds extra, Merrill Lynch reckons.

Barclays shares have lost almost 20 percent in two days and many investors aren’t happy about the cost and the bank riding roughshod over shareholders.

But it looks like a price worth paying. Sure, it’s more than Barclays had expected to pay, but sovereign wealth funds are in the box seat. All banks want SWF money so the investors can get good long-term deals. “Long-term” works both ways as well, and the deal should leave Barclays with a commercial advantage over rivals. Not constrained by government it can poach top staff, pick-up asset bargains and lend how and where it wants. Shareholders should start getting dividends by Q3 2009, long before semi-nationalised rivals.

Most importantly, there’s not a huge chunk of shares overhanging the bank. RBS and Lloyds TSB/HBOS investors face the prospect of the government selling a 58 percent stake and 43 percent holding when markets perk up. If Barclays executives pass up bonuses to show that’s not their motivation for the deal, they should be rewarded in the long run.

Britain’s banks may have borrowed over 200 billion pounds from the Bank of England, four times the amount they were expected to take under an emergency liquidity scheme. It leaves them facing a sharp funding strain next month when the rug gets pulled away.

Alastair Ryan, analyst at UBS, reckons banks have taken over 200 billion pounds under the BoE’s Special Liquidity Scheme since it was offered in April. They had been expected to borrow about 50 billion pounds, although estimates were lifted to near 100 billion as wholesale markets stayed closed. The scheme allows banks to exchange hard-to-trade mortgage assets for government bills.

The problem is the BoE isn’t planning to extend the funding beyond a Oct. 20 deadline . If the borrowing from UK banks has been as high as Ryan estimates, it will have eased a short-term problem but shows how much the liquidity is needed. It also leaves even more medium and long-term funding that the banks will need to replace at some point.

European and U.S. central banks aren’t closing their funding windows. By shutting its window the BoE is pinning its hopes on securitisation markets re-opening, but that seems unlikely soon and could force banks to further shrink their mortgage books at a tough time for them and the housing market.

As the deadline looms, UK regulators, criticised for their handling of Northern Rock at the start of the credit crunch, will face mounting pressure to extend the scheme as confidence among UK banks clearly isn’t back yet.

A dramatic last-minute hitch to plans for France’s EDF to buy British Energy leaves managements, shareholders and especially the British government in a quandary.

It was a 12 billion pounds ($24 billion) deal that was supposed to relaunch Britain’s nuclear energy programme. Everyone had been told to expect it. In fact, the collapse of talks came too late for French newspapers, several of which had been briefed on the deal and splashed it prominently on their front pages on Friday.

In end, however, big insitutional investors persuaded British Energy to reject EDF’s offer as low-ball, despite the best endeavours of the British government, with a 35-percent stake. 

So what happens next? Talks are continuing and British business minister John Hutton says he remains convinced an EDF takeover makes sense; yet the gulf between the EDF and British Energy boards on price is clearly substantial. British Energy says there can be no certainty of any deal.

It is yet another headache to spoil Prime Minister Gordon Brown’s summer holiday, as his popularity slumps to a record low .

(Reuters photo: A sign is seen on the security fence of British Energy’s Heysham nuclear power station)