LONDON - BRITISH Prime Minister Gordon Brown will call on Monday for bold and proactive government policies to steer the world economy through the financial crisis and a subsequent sharp downturn.

'A new approach is now needed if we are to get through this unprecedented global financial recession with the least damage to Britain's long term economic prospects,' he will say, according to an advance copy of his speech.

This approach 'combines the use of monetary policy with a bold proactive use of fiscal policy to support economic activity and confidence through the coming months'.

Such an approach 'supports demand in the economy with all of the instruments at our disposal while maintaining - not cutting - our long term programme of investment and reform', he will add.

Meanwhile on Monday, Mr Brown's finance minister Alistair Darling was expected to launch a huge economic package to combat the looming recession in what could be a crucial week for Brown.

Mr Darling will deliver his pre-budget report - an outline of his taxation and spending plans ahead of the full 2009/2010 annual budget due early next year - at 1530 GMT (11.30pm Singapore time) on Monday.

According to various media reports on Saturday, Mr Darling could increase public spending, while slashing taxes by between 15-30 billion pounds (S$33.6-67.2 billion).

'This is not the time to become prisoners of the old dogmas of the past,' Mr Brown was to say on Monday.

'All over the world, policy makers are leaving behind the solutions of yesterday and recognising that extraordinary times require extraordinary actions.'

Mr Brown won widespread praise earlier this year for a huge 37-billion-pound British banking-sector rescue deal that was emulated in Europe and the United States.

The prime minister will also stress that a coordinated international effort is needed to combat the global financial crisis.

'Our action for Britain will have most impact if it is coordinated with other countries,' he was to say.

'(US) president-elect Obama is making clear that he is planning a significant additional fiscal stimulus when he takes office.

'This is a global solution. We are all in it together. By working together, not retreating into isolationism, we can solve these problems together too.'

Pressure on the pound
If Mr Darling cannot convince investors that Britain will close the budget gap in future years, the pound, which has slumped against the euro and dollar in recent weeks, could slide further and the government's borrowing costs could rise.

Mr Darling is expected to try to reassure markets by announcing plans for deferred tax rises and public spending curbs.

Mr Brown argues that a fiscal boost will be most effective if it is coordinated across Europe. A European Union stimulus package to be announced next Wednesday will total 130 billion euros (S$248.8 billion), according to a German minister.

Britain's package is expected to include tax cuts for low earners, tax relief for small firms, efficiency savings, and help for homeowners struggling to pay mortgages. Darling is also expected to set out plans to speed up infrastructure projects.

Conservative treasury spokesman Philip Hammond told BBC radio the Conservatives backed specific, funded tax cuts but opposed Mr Brown's plan for 'a give-away budget of tax cuts, funded by borrowing which has to be clawed back through higher taxes a year or two down the line'. -- THOMSON REUTERS, AFP