'On Nov 26, we will be proposing a fiscal stimulus based on member states taking coordinated measures, suited to their own economic situations,' Mr Barroso told reporters in Brussels.

'We will act inside the Stability and Growth Pact but using all the flexibility,' he added, referring to the European Union's budget rulebook.

Although the pact requires EU countries to keep their deficits to less than three percent of output, they offer member states some leeway when economic times get tough.

On Wednesday, a German economy ministry spokeswoman said that the European Commission is planning a 130-billion-euro (S$249 billion) economic stimulus programme.

'No political decisions have been taken,' Mr Barroso said. 'There is work in progress but I can not at this moment confirm or deny any of the figures that I have seen.' -- AFP