Brown's 5-point plan as world enters 'night of uncertainty'

• Allegra Stratton, political correspondent
• guardian.co.uk, Monday November 10 2008 00.01 GMT
• The Guardian, Monday November 10 2008
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The international financial system is in a "night of uncertainty" Gordon Brown will say today when he uses his annual foreign policy speech to set out the five-point economic recovery plan he will put to other world leaders in Washington this weekend.

Brown's speech will be delivered amid speculation that the government is considering announcing tax cuts in the forthcoming pre-budget report (PBR). Experts at the Institute for Fiscal Studies have said that any effective fiscal stimulus package has to be in the order of 1% of national income - or £15 billion - to have any effect.

In his speech today Brown will hail the "power" of coordinated global action to recapitalise banks and cut interest rates for homeowners and businesses. In his keynote address to the lord mayor's banquet in London this evening, Brown will describe the forthcoming Washington meeting as a new Bretton Woods and call for the development of a "multilateralism that is both hard-headed and progressive". He will call for "a new IMF that offers, by its surveillance of every economy, an early warning system and a crisis prevention mechanism for the whole world."

Brown will say: "As the world's financial system works through this night of uncertainty towards a new dawn, we must use the power of multilateralism to establish a new, decisive and systemic approach to strengthening the global economy.

"My message is that we must be internationalist not protectionist; interventionist not neutral; progressive not reactive; and forward-looking not frozen by events." He will also sketch out his five-point plan for the overhaul of international financial structures: the recapitalisation of banks and a resumption of lending to businesses and families; better international coordination of fiscal and monetary policy; a new bailout fund for the IMF; a new trade deal; and greater transparency.

Though Labour retained the Labour seat of Glenrothes last Thursday, Brown remains under pressure to make sure his efforts on the international stage are mirrored by initiatives in the UK. Announcements such as an increase in the winter fuel allowance, a further postponement of the fuel duty levy and an extension of the stamp duty "holiday" in the pre-budget report would go some way towards achieving this.

The Conservatives will this week announce a tax-cutting measure which sources called an "unemployment alleviating measure". George Osborne will announce the measure - possibly the freezing of national insurance payments, which would keep employers hiring staff through a recession - on Tuesday, the day before unemployment figures are published.

The party has recently announced it would freeze VAT payments for six months for small businesses. A Treasury source said the government's own focus group research showed voters were more concerned by the threat of home repossession than unemployment.

In an article for the News of the World yesterday the Conservative leader, David Cameron, described lower taxes as being "in my DNA", though the Conservatives' economic platform has so far failed to resonate with voters. An ICM/Sunday Telegraph poll yesterday showed the Conservatives on 43%, with Labour on 30% and the Liberal Democrats on 18%. But 40% of respondents said they trusted Brown and Darling to steer them through the economic downturn, compared with 38% for Osborne and Cameron.