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Rapid, coordinated and concerted action is needed to combat the global economic downturn Gordon Brown said today as he paved the way for an expected announcement on tax cuts.
In a Commons statement on the weekend's first ever meeting of the G20 group of world leaders in Washington, the prime minister said there was an "emerging consensus" on the need for a broad and concerted international macroeconomic policy response to the financial crisis.
"The more coordinated the action the greater the benefit to each country will be," he said. "But I believe the emerging consensus across the world – from the IMF itself and from government of left and right, and in developed and developing countries – is that we should take rapid coordinated and concerted action through the use of budgetary measures."
The prime minister told MPs that the summit had agreed to reform global financial institutions and accepted that the recapitalisation of banks was the correct course of action.
"The action taken in the UK to recapitalise banks has now been followed in every continent," he said.
Reporting back to MPs just a week before the pre-budget report - which is expected to contain a £15bn "fiscal stimulus" with increases to tax credits and winter fuel payments to those on low incomes - Brown set out the scale of the financial crisis facing the developed and developing world.
But he faced Tory jeers and protests when he again stated that the problem had "started in America".
Brown said: "These unprecedented global events call for unprecedented global action."
The prime minister insisted it was vital that G20 leaders resisted all forms of protectionism and called for greater transparency and international cooperation.
Brown also said there was scope for further action on interest rates.
Britain, as the next chair of the G20, will lead the preparations for a follow-up summit in the spring, with an exact date and venue to be announced next week, Brown said.
David Cameron, the Tory leader, hit back at suggestions that the chancellor would use next Monday's mini-budget to announce sweeping tax cuts, warning: "Tax cuts are for life, not just for Christmas."
He cautioned against short-term fixes that would saddle the country with years of debts.
Cameron said that the prime minister had told MPs that the crisis had started in America so many times that "it's starting to sound ridiculous".
"If Britain is so well prepared can you explain why the IMF believes the British economy will shrink faster next year than any major economy in the world?" he asked.
That was why sterling had fallen in the last few months more sharply than any major currency, Cameron said.
He quoted: "A weak currency arises from a weak economy which is in turn the result of a weak government."
As Labour MPs pointed at the Tory frontbench, Cameron added: "I don't know why you are pointing at me, that wasn't my honourable friend [the shadow chancellor, George Osborne] this week, that was the prime minister when he was shadow chancellor."
Osborne was accused of talking the economy down at the weekend after he warned of a collapse in sterling.
Cameron rejected Brown's claims that there was international agreement on the need for a "fiscal stimulus".
He said: "The real international consensus is that it's only the countries that have been fiscally responsible that are best placed to act now."
Britain's debt was not sustainable because its borrowing was among the highest in the developed world, he said.
"We need real tax cuts, not Labour tax cons."
- Tax and spending
- Gordon Brown
- Economic policy
- George Osborne
- Alistair Darling
- Credit crunch
- Economics
- Recession
- Market turmoil
- Tax
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