Brown: 'importance of policy'

World leaders meeting to hammer out plans to haul the global economy out of recession have agreed to reconvene next year under president Barack Obama, probably in London, to reshape the world's battered financial system.

A summit of 20 of the world's most powerful countries was yesterday working on an action plan to boost economic activity and bring stability to financial markets – and then kick-start trade talks that Gordon Brown said could bring longer-term benefits. A second G20 summit, expected to be hosted by Britain, was pencilled in for April, after an initial session of talks at the White House on Friday. It gives the new US president time to work on wider plans for a new era of international co-operation.

But the prime minister told reporters yesterday that there was much that could be done immediately to return the world economy to health, including the co-ordinated tax cuts for which he has been pushing. "We've got to see how countries will respond on the fiscal side," he said. "The important thing is the recognition, which has not been true in previous downturns, of the importance of fiscal policy."

The G20 summit brought together the leaders of Western powers and those from emerging economies, including China, Brazil and India, whose own economic fortunes have worsened as the credit crisis has spread out from the US housing market to engulf the rest of the world.

Pakistan yesterday became the latest country to agree an emergency loan from the International Monetary Fund. A Pakistani government official said it would seek a $7.6bn bail-out from the IMF to replace billions of dollars of foreign capital that has fled the country. The IMF has already had to ride to the rescue of Hungary and the Ukraine in recent weeks.

Emerging nations, led by Brazil, have been pushing for a greater say in the running of the IMF, but long-term reforms will take months or years to hash out. What leaders agreed yesterday was that national governments could move quickly and in concert to ease the effects of recession, and some of the emerging nations had harsh words for the bigger countries where the financial crisis developed.

Brown said: "I want the Indian and American dispute to be resolved, and then I want the trade ministers to be instructed that they meet before the end of the year. It's what we have been pressing for for some time. If you can send out a message that protectionism is unacceptable, you're doing what was not done in previous world downturns, when people turned inwards."

While a new era of international regulatory co-operation will help reshape financial markets, this weekend's summit fell far short of the "Bretton Woods II" that Brown predicted last month. The Bretton Woods agreement in 1944 established the IMF and the World Bank and formalised a system of fixed exchange rates to bring stability to the financial world.

French demands for a supra-national regulator with sweeping powers to enforce rules on multi-national companies appeared to gain little traction, although a British plan for a "college of supervisors" to examine risks posed by multinational banks did win tentative support from the US. Leaders were "looking for a way forward", US president George Bush said. "There's some progress being made, but there's still a lot more work to be done."