Significant progress has been made on agreeing America’s $700 billion (£380 billion) bailout plan for Wall Street, congressional negotiators said yesterday.

Harry Reid, the Senate majority leader, said there were 15 outstanding issues to be resolved in agreeing Treasury secretary Hank Paulson’s Troubled Asset Relief Programme (Tarp). There was still a long way to go in the negotiations, but “significant progress” had been made.

The White House also talked up the prospect of a deal, considered essential before financial markets open tomorrow.

President George Bush, in an address to the American nation, said there was “widespread agreement” in Washington on the principles of the bailout plan and that the eventual cost would be well under the current $700 billion price tag.

Many of the assets taken into public ownership under the plan would rise in value over time, he predicted.

Congressional staff worked through the night to turn the plan into legislation. Barney Frank, chairman of the House financial committee, said: “I am convinced that by Sunday we will have an agreement that people will understand on this.” The deal would be voted on tomorrow.

Nancy Pelosi, the House speaker, said Democrats would no longer be pursuing an amendment to the proposals that would have required judges to suspend repossession notices on foreclosed homes.

Though the prospect of a deal on the $700 billion Tarp improved yesterday, economists warn that it is unlikely to be the end of the crisis.

Wachovia was the latest American bank to be hit by heavy selling pressure on Friday.

In Britain, business urged the Bank of England to take into account the severity of the crisis and consider early cuts in interest rates.

“Of course inflation remains a concern, but the monetary policy committee cannot ignore the serious risks facing the global economy as a result of the banking crisis,” said David Kern, economic adviser to the British Chambers of Commerce.

“In the face of these threats this is the wrong time to worry unduly about inflationary expectations.”

A survey of analysts by Ideaglobal.com, the financial-research company, put a 30% probability on a cut in Bank rate next month.

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