Revived efforts to clean up the US banking system, alongside a new “fiscal stimulus” of tax cuts and state spending, will be essential to fostering an American economic recovery, the Chairman of the Federal Reserve said yesterday.

Ben Bernanke used a keynote speech in London to sound a warning that a second stimulus package being planned by the incoming Obama Administration will not, by itself, generate a sustained US economic recovery.

While giving backing to the proposed stimulus as likely to give a “significant boost”, Mr Bernanke emphasised: “Fiscal actions are unlikely to promote a lasting recovery unless they are accompanied by strong measures to further stabilise and strengthen the financial system.”

The Fed chief issued a strong call for a resurrection in some form of a previous bank bailout scheme that was launched and then ditched by Henry Paulson, the outgoing US Treasury Secretary.

He suggested that Tim Geithner, Mr Paulson’s successor, should consider either buying up banks’ holdings of distressed and hard-to-trade assets; providing asset guarantees to banks in return for stock warrants that would reward US taxpayers for shouldering risk; or creating a “bad bank” which would take over the distressed assets in return for a payment.

“More capital injections and guarantees may become necessary to ensure stability and the normalisation of credit markets,” Mr Bernanke said.

“With the worsening of the economy’s growth prospects, continued credit losses and asset markdowns may maintain for a time the pressure on the capital and balance sheet capacities of financial institutions,” he added in an address to the London School of Economics.

His comments come as the Prime Minister and Chancellor, who held talks with him yesterday in Downing Street, are urgently examining similar, renewed bailout moves for Britain’s fragile banking system.

As President-elect Obama and his aides weigh up their plans to tackle the economic crisis when they are in office, fears over the scale of the US recession were reinforced as a record monthly slump in US imports emphasised how hard American consumer demand is plummeting.

US imports tumbled by 12 per cent in November – equivalent to $25 billion (£17.2 billion) as the effect of crumbling consumer spending on foreign goods combined with lower import bills for oil after the recent steep slide in the cost of crude.

The toll on the US economy from the global downturn was aggravated as American exports also fell sharply, by 5.8 per cent in November, as overseas markets wilted. But with imports declining even faster than exports, the US trade gap narrowed by much more than expected to a five-and-a-half-year low of $40.4 billion.

Mr Bernanke said that the way in which Western governments now respond to the continuing financial crisis would determine the timing and strength of world economic recovery.

He said: “For almost a year and a half, the global financial system has been under extraordinary stress – stress that has now decisively spilt over to the global economy more broadly. The damage, in terms of lost output, lost jobs, and lost wealth, is already substantial.”

Meanwhile, Germany stepped up its efforts to shield Europe’s biggest economy from what now threatens to be its worst recession since the Second World War. In an attempt to silence growing attacks on its economic strategy, the coalition government of Angela Merkel unveiled a €50 billion (£45 billion) package of infrastructure investment, modest tax cuts and guarantees to ailing companies.

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