LEADERS of the G20 countries meeting in Washington last night endorsed a plan for worldwide action to boost the global economy through tax cuts, higher public spending and lower interest rates.

They also signalled a determination to press on with the completion of the Doha world trade round by the end of the year. But they put off work on a new global financial architecture, including co-ordinated cross-border regulation of financial institutions and an enhanced role for the International Monetary Fund, until next year.

Aides said such work would wait until US President-elect Barack Obama was in office. Detailed proposals will be drawn up before a second G20 summit, probably in London, in April.

Speaking ahead of the summit’s conclusion last night, Gordon Brown said he was confident other countries would announce their own fiscal stimulus packages, saying Britain’s planned tax cuts and extra spending could be twice as effective if matched by global action.

Business is backing the global call for a big tax cut in the pre-budget report a week tomorrow to ease the pain of recession. The Institute of Directors (IoD), in a submission to be published tomorrow, calls for £20 billion of temporary tax cuts and a bringing-forward of infrastructure projects. Its proposals include an emergency 3p cut in the basic rate of income tax and 4p off corporation tax.

The IoD will say it is necessary for “aggressive” use of fiscal policy to support interest-rate cuts to tackle the crisis. The tax cuts would be phased over a five-year period and combined with tight control of public spending to bring the government’s finances back into balance, it says.

“The Bank of England has stepped up to the plate and now 10 and 11 Downing Street must follow,” said Miles Templeman, the IoD’s director-general.

The IoD wants an immediate cut in income tax from 20% to 19%, with a further cut to 17% in April, costing £15 billion in the 2009-10 tax year. A cut in the main rate of corporation tax from 28% to 24%, from April, would cost £5 billion next year.

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