Brown calls for global tax cuts

Gordon Brown is pressing world leaders to work together to combat the deepening economic crisis at a summit of the leading economies in Washington.

The prime minister on Friday addressed the Council on Foreign Relations think-tank in New York before heading to the US capital where president George Bush is hosting the G20 talks.

In a speech at the United Nations headquarters, Brown again warned of the dangers of countries retreating behind trade barriers in the face of the economic downturn and said there should be a co-ordinated tax cut across the major economies.

Brown said: "Let me send out the strongest message that the road to economic ruin in the past has been following the path of protectionism.

"The way forward is not countries working in isolation or against each other, but countries co-operating together."

Brown intends to use the weekend talks to urge other leaders to adopt their own "fiscal stimulus" package of tax cuts and spending increases along the lines of those currently being drawn up by chancellor Alistair Darling.

Darling will announce his proposals in the pre-Budget report on November 24. However Brown is concerned that their success in getting economic activity going again will be limited unless such measures are taken up around the world.

Earlier the prime minister told reporters: "It is now becoming increasingly accepted around the world that a temporary and affordable fiscal stimulus is necessary.

"This will have most impact if it is co-ordinated internationally. By acting now we can stimulate growth in our economies.

"There is a need for urgency. The cost of inaction will be far greater than the cost of any action."

Brown hopes that the kudos he has gained through his leadership in bailing out the banks will now help him to influence the direction of wider economic policy.

While China, Germany and Japan have already announced their proposals to get their economies going, US president-elect Barack Obama has said that he will be bring forward his own measures when he takes office in January.

The latest moves come on the back of a co-ordinated 0.5 per cent cut in interest rates by central banks around the world - including the Bank of England - to try to inject new life into the world economy.

But even after last week's unprecedented 1.5 per cent by the Bank of England - with indications of more to follow - there are fears that such measures on their own will not be sufficient.

Brown said that he would be using the meeting to press for a reopening of the Doha round of world trade talks following their collapse in Geneva last July.

He will also be pushing for a clear timetable for reform of the international financial system as well as agreement on additional funding for the International Monetary Fund to bail out countries which run into trouble.