This is London’s big chance to lead the world out of crisis

This is an opportunity both to showcase the city and also to take a big step towards ensuring London can return to prosperity as quickly as possible.

The most important benefit will be the opportunity to agree further co-ordinated action to create jobs, tighten and toughen up banking rules, increase support and bank lending for businesses and protect families in London and across the world.

Let us not forget that it took years for the world to recover from the 1929 Wall Street crash; that a previous summit of major economies in London in 1933 collapsed in disunity and the world retreated into a downward spiral of protectionism and depression; and that it was not until 16 years later, in 1945 at Bretton Woods, that the world was able to unite and agree the new international economic and financial architecture that laid the foundations for half a century of peace and prosperity.

We must learn the lessons of the past. And today, in a new and different world, the new global economy is meeting its first big test. The speed and scale of global economic change has overwhelmed the old national systems of rules and regulations. We have to show that out of global problems we can agree global solutions. The London summit is the chance to show we can work together.

Already the work leading to the summit has generated action on a wide range of issues, on a scale that would normally have taken years to achieve.In short, the economics of the depression-era US President Herbert Hoover - of doing nothing except retrenchment and cutting spending - has been firmly rejected right across the globe. Governments of Left and Right are intervening to take action to help people and businesses in their countries through this global recession.

The world leaders coming to London this week know that sitting back and failing to act would be the greatest failure of leadership.

While the action we all take comes with a price and the decisions to take action are not taken lightly, the cost of doing nothing, and allowing the world to slide into prolonged recession, would run the greatest risk of all.

So in the past few months governments have taken action to boost their economies, to co-ordinate cuts in interest rates, to tackle tax havens and to impose stronger regulation of the financial system to stabalise hedge funds and put an end to the short- termist bonus culture.

But although good progress has been made, we all still have more to do: first, we must tighten financial regulation across the world to keep up with the growth of global finance. So many of our workers here in London depend on the health of the Square Mile and I know that ordinary City workers are feeling the pain of the worldwide financial colIapse that has triggered this global recession.

I share the anger people feel about the mistakes made by some of our bankers, both here and abroad. But it is fitting that we are seeking to agree new rules for global financial markets here in London. Getting this right can provide a platform for a reformed City to secure its place as the world's leading financial centre in a more responsible, better supervised global system that our economies so urgently need.

Put simply, national systems working alone aren't enough and we need to take action to join up and tighten the rules for our financial markets. That means tackling shadow banking systems and tax havens and it means agreeing the next steps to reform our global institutions like the Financial Stability Forum, the IMF and the World Bank to stop this kind of crisis happening again.

Second, on trade - the lifeblood of the global economy - we must agree to keep markets open and reject protectionism in any form. And we will need action now to jump-start world trade by helping businesses export through by providing more than $100billion of extra resources to help finance exports.

Third, we need to continue to do whatever it takes to shorten the recession and kick-start global growth. The big emerging countries - some of whom I visited last week - will be key to the global recovery, creating jobs not just overseas but in this country as well.

Seventy per cent of world's growth has come from developing countries in the past decade - and if other economies grow alongside our own, we all benefit from increased trade and job opportunities. But developing countries need access to international support - such as from the International Monetary Fund - if they are to drive future growth. So at the London Summit I will press for a further boost to the IMF's resources.

This is a decisive moment for the world economy. Growth has stalled around the world. We have a choice to make. We can either let the recession run its course and retreat into isolationism - a "do nothing" approach that will push us further into recession. Or we can resolve as a world community to unite, to act and fight back against this global recession that is hurting people in every country in every continent. This is the test we face in London this week.