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The Governor of the Bank of England has asked the Government for permission to start "printing more money" in a bid to tackle the recession.
Reports suggest that Mervyn King has formally asked Chancellor Alistair Darling to use quantitative easing tactics as early as next month to increase the flow of money into the contracting economy.
The news comes as Prime Minister Gordon Brown called for world leaders to strike a "grand bargain" to counter the economic crisis, which is taking hold around the world.
In a speech outlining his hopes for the G20 summit of world leaders in London in April he called for co-operation on banking reform and fiscal stimulus packages in order to get the global economy out of the crisis.
Mr Brown told his regular Downing Street press conference: "I think we are fashioning for the future a global deal, a grand bargain, where each continent accepts its responsibilities and its obligations to act to deal with what is a global problem that can only be solved with a global solution."
Referring to the United States' $787 billion (£546 billion) stimulus package, which Mr Brown called "the biggest fiscal and monetary stimulus in the history of its country", he said that every country must be part of the action to get the economy moving.
"Every part of the world must be part of the stimulus to the economy, giving support into the economy with investment, getting interest rates down as much as possible," the PM said.
He added that discussions at the G20 summit will look at how all countries can come together to achieve this, because the "old orthodoxies will not serve us well in the future".
Mr Brown said: "We've got to think the previously unthinkable, we've got to do what was previously undoable."
But he said that this can only be achieved through global co-operation, which has not been done before.
He also expressed "regret" that he had been unable to secure better cross-border financial regulation before the near-collapse of the sector.
Copyright © Press Association 2009
