Gordon Brown has called for a complete overhaul of the global financial architecture, with emphasis placed on strengthening crisis prevention rather than on the current focus on cleanup.

Speaking at the World Economic Forum in Davos, the British Prime Minister said: “The problem is that our institutions were built in the 1940s for sheltered economies, for limited competition, for national not global flows of capital so we’ve got to rebuild these institutions.”

Mr Brown said help from the International Monetary Fund comes too late when countries are already in deep trouble. “What you’ve got to do is have a preventative facility which deals with crisis prevention rather than crisis resolution,” he said.

“If we don’t act protectionist tendencies will become paramount and we will have failed in this first stage of building a new global era which I hope will end with a global economy becoming a true global society,” he added.

Lord Mandelson, the business secretary, speaking from the sidelines of the World Economic Forum, said that the UK Government needed to prove its fiscal credibility to the markets. He said one of the priorities was to ensure that "we are rebalancing the public finances so that we can meet market requirements and sustain the desired fiscal stimulus in the meantime.

"If we do not continue to enjoy the confidence of markets in what we are doing in our fiscal plans and our borrowing, then it would make it very much more difficult if not impossible to sustain the stimulus which we judge is so important and necessary for the economy," he added.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive