Brown calls for united global action to stop banks disaster

World leaders were today battling to stop a catastrophic economic crisis after stock markets plummeted.

Gordon Brown demanded the "boldest" of united action from around the globe and US president George Bush was this afternoon due to make a special address on the economic turmoil.

America is considering whether to follow Britain's lead on buying equity in banks or guaranteeing all savings.

However, the Prime Minister's desperate plea for a co-ordinated response seemed to have so far failed to spur several EU countries into action.

Chancellor Alistair Darling was today stepping up the UK demand for a united masterplan to deal with the crisis at a meeting of the G7 group of nations in Washington.

As the economic clouds darkened, the International Monetary Fund announced that it has a £116 billion war chest to bail out stricken nations.

In Britain, Tony McNulty became the first member of the Government to admit that Britain is heading for recession. Mr McNulty, who is London minister and work and pensions minister, said the success of the Government's £500 billion bank rescue plan "will be the precursor to how deep and how long the recession will be".

He added: "We're slowly getting to a stage where the slowdown may well turn technically into recession and then we'll be talking about the nature and depth of the recession."

Amid the gloom, Mr Brown stressed that a "global problem requires a global solution". He told The Times: "We have not flinched from taking the bold and far-reaching decisions needed to support British families and businesses through these extraordinary times.

"The resolve and purposefulness of governments and people across the world is being put to the test. But across the old frontiers we must now redouble our efforts internationally.

"For it is only through the boldest of co-ordinated actions across the globe that we will adequately support families and businesses."

The White House stressed that Mr Bush will today tell Americans that "people should be confident that economic officials are aggressively taking every action to stabilise our financial system".

France, Italy, Belgium and Luxembourg have followed some aspects of Britain's bank rescue package but not on the same scale.

The Government is set to borrow billions extra to deal with the downturn but Universities Secretary John Denham stopped short of ruling out tax rises.

Asked on the BBC's Question Time about possible tax rises, he said: "We will have to see what happens in the next budget. We will have difficult
decisions to make. We have to keep the spending that people depend on going."

Work and Pensions Secretary James Purnell admitted that the Government was now planning for a rise in unemployment.

In Washington, Mr Darling was also calling for greater transparency and disclosure in the banking system, a better early-warning mechanism for looming crises, a review of capital requirements and a crackdown on the bonus culture which has fuelled irresponsible and excessive risk-taking.