The Bank of England and four other powerful central banks are to inject £50 billion into global money markets in unprecedented joint action to ease mounting strains that threaten to tip the world’s leading economies into recession.

In a move praised by Gordon Brown in an exclusive interview with The Times, the Bank joined a group led by the US Federal Reserve in plans to dampen pressures on markets that threaten to drive up interest rates for households and companies around the world.

Mr Brown today will cite the move as the kind of action that bodies such as the EU should focus on as he tells European heads of government to stop looking in on themselves, forget about constitutions and start showing some leadership in the world.

He told The Times that it was the kind of co-operative action the EU should be thinking about rather than “semi-constitutions”.

On the eve of today’s signing of the new European reform treaty in Lisbon, Mr Brown told The Times that Europe should from now on focus on the economy, trade and climate change rather than arguments about itself. “What I'm going to say to Europe is stop looking inwards, stop looking at constitutions or semi-constitutions or institutions for a long time ahead, and for the foreseeable future concentrate on the big issues ahead of us,” he said. “What I’m going to do is call for Europe to show some global leadership.”

He brushed aside the “fuss” over his decision to arrive late in the Portuguese capital because of his appearance before the Commons Liaison Committee, insisting that he had agreed to go in front of the MPS before the details of the signing ceremony were confirmed. He will arrive in Lisbon this afternoon after the other 26 leaders have signed, and then append his signature separately.

And he denied suggestions attributed to some European leaders that he appeared “marginal”.

Mr Brown spoke to The Times minutes after the joint action by the central banks was announced. The Bank of England and the US Federal Reserve, along with the European Central Bank and the Swiss and Canadian central banks, simultaneously unveiled plans to pump billions in extra funds into the global markets for lending between commercial banks.

Those markets have come close to seizing up as the world’s big banks have hoarded cash, rather than lend it to each other, because of highly unusual end-of-year funding pressures combined with fears over the losses they may face on risky home loans to US sub-prime homebuyers.

The knock-on effects on the money markets are threatening to driveup borrowing costs for businesses and households in Britain, and other big economies, so putting the outlook for their economic growth in danger.

Global stock markets initially leapt on the news but the relief rally faded as uncertainty clouded investors’ reaction. The FTSE 100 index initially jumped 74 points but closed up only 22.9 points. The Dow Jones industrial average surged by 239 points but finished up just 41.1 points.

City experts said that the combined action would help to ease mounting financial strains and to limit an expected sharp slowdown in economies on both sides of the Atlantic next year.

The Bank of England, which has faced a barrage of criticism from the City for failing to take more aggressive action in recent months as the global credit squeeze has deepened, detailed its own contribution.

It will sharply raise, to £11.35 billion, the amounts it will offer to Britain’s banks in two auctions of funds on December 18 and January 15. On both occasions it is to make £10 billion of the total lending available for three months, and will also now accept a greatly widened range of assets as security for the funds, including high-grade bonds linked to mortgage debts.

“These actions demonstrate that central banks are working together to try to forestall any prospective sharp tightening of credit conditions,” a Bank of England spokesman said.

In total, the five banks joining in yesterday’s initiative will inject some $110 billion or more of funding into money markets in a series of auctions in the next few weeks. They said that they would detail the amount of funding to be made available in subsequent auctions in the new year.

During the interview with The Times Mr Brown:

— Refused to back down over the staging of the police pay award;

— Said he did not get into the detail of individual donations to Labour;

— Predicted a big improvement in the health service a year from now.

The power struggle

Gordon Brown lays claim to being a more savvy environmentalist than David Cameron today, revealing that he opted for solar panels on his home after wind turbines were shown to be less green (Lewis Smith writes).

In an interview with The Times, Mr Brown takes a subtle dig at the Tory leader, who had turbines installed on his Notting Hill home last year. However, Mr Cameron’s home also has solar panels.

Mr Brown chose solar pv, a system of photovoltaic panels that generate electricity for household applicances. They can cost as much as £24,000 to install. The electricity they save varies from about £100 to £200 annually and in some cases they are estimated to take 200 years to pay for themselves. A wind turbine, such as the one used by Mr Cameron, costs about £3,100 to install. It would produce £52 of electricity each year and slash 0.49 tonnes of CO2. Research is still being carried out to assess the value of wind turbines.

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