Brown to meet Merkel on economy after tiff

British Prime Minister Gordon Brown will hold talks on the economy with German Chancellor Angela Merkel in Berlin next Wednesday, after signs of tension emerged between the two EU states in recent weeks.

Mr Brown will also meet US Federal Reserve chief Ben Bernanke in London next Tuesday, his office said.

The financial situation will be on the agenda for both meetings, a spokesman for Mr Brown said.

Last month Germany and Britain, two of Europe's biggest economies, became embroiled in a diplomatic row after Germany's finance minister criticised the British Prime Minister's plans to borrow billions of pounds to try to stop a recession turning into a slump.

With Britain chairing the G20 group of big industrialised and emerging economies this year, Mr Brown and finance minister Alistair Darling will step up discussions with other countries in the coming weeks "on the next steps forward" in tackling the financial crisis, Mr Brown's office said.

Mr Brown will host a G20 summit in April to assess pledges to assist the world economy made at a Washington summit last November. The state of the economy was the main item on the agenda during a two-hour meeting of Mr Brown's Cabinet in the northwestern city of Liverpool yesterday.

"The Prime Minister referred to the increasingly challenging global economic environment," a statement from Mr Brown's office said.

The Bank of England cut interest rates by half a percentage point yesterday to a record low of 1.5 per cent as policymakers - caught out by the severity of the downturn - pull out all the stops to soften the economic slide.

Carmaker Nissan's announcement yesterday that it will cut 1,200 jobs, following the loss of thousands of retail jobs in the last month, deepened the gloom.

Noting US and German plans for economic stimulus packages, Mr Brown said there was a "widening global consensus on the right way to tackle the global downturn", the statement said.

Mr Brown's government is spending billions of pounds of borrowed money on tax cuts and public spending aimed at stopping the downturn turning into a slump and has urged other countries to follow suit.

Despite last month's criticism of Mr Brown's plans from German Finance Minister Peer Steinbrueck, Ms Merkel's coalition partners are now trying to hammer out a new economic stimulus package, which could total €50 billion ($67.8 billion).

French President Nicolas Sarkozy held talks with Ms Merkel in Paris yesterday.

He said afterwards that European leaders from G20 nations would meet in Berlin in the coming weeks to draw up a joint approach before the April G20 summit.