Europe's leaders agree financial crisis action

Saturday, 4 October 2008 8:04 PM

Europe's four largest economies will work together to support financial institutions.

But there will be no joint bail-out fund to rescue failing banks their leaders have said.

French President Nicolas Sarkozy announced a number of measures - including action to be taken against the executives of failed banks - following a meeting of the leaders of Britain, Germany and Italy in Paris this afternoon.

By the end of the meeting the French president said: "Each government will operate with its own methods and means, but in a co-ordinated manner."

Prime Minister Gordon Brown said each government would continue to take measures to ease the credit shortage.

"The message to families and to businesses is that, as our central banks are already doing, liquidity will be assured in order to preserve confidence and stability," he told reporters after the mini-summit.

The head of the International Monetary Fund (IMF), Dominique Strauss-Kahn, had earlier urged the EU to take co-ordinated action, saying the financial crisis was presenting Europe with a "trial by fire".

He held talks with Mr Sarkozy before the EU leaders' meeting and said that although the EU was a more complex organisation than the US, Europe needed to take "concerted collective action".

He said: "It has to be indicated to the markets... that European countries will not react as every man for himself."

He also said he would be scaling back his world economic growth forecasts.

European Central Bank chief Jean-Claude Trichet and the chairman of the eurozone group of finance ministers, Jean-Claude Juncker, also attended the meeting.

The meeting follows the rescue of Bradford & Bingley by the governmetn in the UK on Monday and Fortis bank by the government's of Belgium and the Netherlands later in the same week. It also follows a difficult week in the US for president Bush whose own economic bale out proposals were intially rejected by the US congress and were only then passed after a week of what can best be described as pork barrel politics by his own party.

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• economy
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• world economy