The stabilisation of financial markets and stimulation of the global economy will require unprecedented policy co-ordination among the world’s political leaders in 2009. Failure to co-ordinate in this way will slow recovery and reduce the aggregate impact of the stimulus packages being contemplated or implemented by individual governments. Worse, fragmented actions could yield incrementally to “beggar thy neighbour” policies that run the risk of accelerating rather than ameliorating the crisis.

The International Monetary Fund estimates the global economy needs a fiscal stimulus of at least 2 per cent, or $1,200bn (€882bn, £798bn), in 2009 to ward off the worst effects of the crisis. Economists acknowledge that much more may be required if shattered confidence sets off a spiral of deleveraging, declining asset values, falling income and rising unemployment.