Darling hails 'progress' over slump

G20 finance ministers gathering in Sussex pledged to use fiscal and monetary policy, step up financial regulation and support developing economies through the slump.

But it remained unclear how much further individual countries were prepared to use fiscal stimulus measures, which the US has suggested may be necessary.

German Chancellor Angela Merkel, in London for talks with Prime Minister Gordon Brown, indicated earlier that additional use of tax-and-spend policy was not a priority at this stage, suggesting that any talk of further fiscal actions were premature as Germany's current package was yet to be implemented fully.

"Nothing has actually taken effect on the ground," she said through an interpreter. "If we want to strengthen the effect of such packages we will simply have to implement them first."

But Mr Darling struck a positive note when he spoke to reporters, while US President Barack Obama rejected any suggestions of a rift.

The Chancellor said: "We have taken decisive and comprehensive action to boost demand and jobs and, importantly, we stated that we are prepared to take whatever action is necessary to ensure that growth is restored and we are committed to do that for however long it takes to do that.

"We committed ourselves again to fight all forms of protectionism and to maintain open trade and investment. Substantial measures have already been taken in many countries, but we made it clear we are ready to do more if that is what is required."

Saturday's gathering, laying the ground for the G20 heads of government meeting to be chaired by the Prime Minister in London next month, agreed as its priority the need to restore lending by banks and other financial institutions.

There will be a "common framework" for providing liquidity support, bank recapitalisation and addressing the issue of toxic assets, Mr Darling said. Central bank chiefs from the G20 nations - who also attended the meetings, would co-ordinate monetary policy to fight the recession.