COMMENT: Backslapping and results at the G20 | Sarkozy tax havens attack blunted by allegations | RIDDELL: Never mind the G20, votes are homegrown | Riot police break into London squats | Q&A: the G20 deal | FULL TEXT: G20 communique

The London summit pledged a $1.1 trillion boost to the international economy last night, hailing a confidence-building deal that would lift the world out of recession next year.

Stock markets around the world soared as the heads of 20 ofthe largest economies trebled International Monetary Fund resources to $750 billion, gave emerging nations access to $250 billion of emergency currency reserves and promised an extra $250 billion in credit for trade finance.

Gordon Brown, who hosted the London summit, said: “This is the day that the world came together to fight back against the global recession.”

The London G20 summit may not have yielded the second big co-ordinated fiscal stimulus that Mr Brown and Barack Obama had hoped for when it was called in November last year.

Even so, the scale of the new $1.1 trillion resources made available to institutions was much larger than expected. There was also a specific and timetabled agreement to take whatever steps were necessary to restore growth.

All leaders, particularly Mr Brown, Mr Obama and Nicolas Sarkozy, the French President, heralded a successful outcome. The boost was completed by a $6 billion sale of IMF gold reserves to help the poorest countries.

The measures were announced alongside a far-reaching clean-up of the banking system, including what Mr Brown described as the “start of the end” of tax havens, an issue that threatened at one stage to hold up an agreement. A late intervention by Mr Obama helped to smooth over differences between Mr Sarkozy and Hu Jintao, the Chinese President.

Mr Brown and summit leaders also declared that the stimulus to the world economy already announced would amount to a staggering $5 trillion, a bigger sum than so far claimed but reached by including measures that will come into effect next year, and adding the impact of interest rate cuts.

The IMF is to assess the impact of the measures already announced and report to a new G20 summit in New York in September as to whether more is needed.

The Prime Minister said that the deal agreed at the ExCeL centre would shorten the global recession and save jobs around the world.

“This is the day that the world came together to fight back against the global recession, not with words but with a plan for global recovery and reform,” he said. “Today's decisions, of course, will not immediately solve the crisis but we have begun the process by which it will solved.”

The agreement was a diplomatic success for Mr Brown after Mr Sarkozy and Angela Merkel, the German Chancellor, had threatened to scupper a deal unless there was tough action to reform the global financial system.

In the event, both leaders proclaimed themselves satisfied with the outcome – which included new rules on bankers' pay and bonuses, action on tax havens and curbs on hedge funds. Mr Sarkozy said that “a page has been turned” on the “Anglo-Saxon” financial model, and Ms Merkel said that it represented “a very, very good, almost historic compromise”.

Mr Obama said that the agreement marked “a turning point in our pursuit of global economic recovery.

“By any measure, the London summit was historic. It was historic because of the size and the scope of the challenge that we face and because of the timeliness and the magnitude of our response,” he said.

Mr Brown received an ovation from fellow leaders as the summit closed.

Dominique Strauss-Kahn, IMF managing director, hailed what he called “the most co-ordinated stimulus ever”.

News of the agreement prompted a surge of confidence on the Stock Exchange with the FTSE 100 closing up 169.4 points at 4,125 — the first time that it had passed the 4,000 mark in six weeks.

Under the deal tax havens were put on notice to clean up their act or face sanctions by the end of the year. A blacklist of countries that breach international tax standards was published last night as havens were told that the “era of banking secrecy is over”. Costa Rica, Malaysia, the Philippines and Uruguay topped the list.

“This is the start of the end,” Mr Brown said. “People will increasingly see it as unsafe to be in a country that wants to declare itself a tax haven.”

The publication of a blacklist was resisted until the last moment by China, itself not a member of the Organisation for Economic Co-operation Development, which drew up the list of target countries. It gave way after Mr Obama brokered a deal in which a final list of tax havens will be published by the end of the year, probably by the G20. The compromise allowed the summit to avoid the issue of whether Hong Kong and Macau are tax havens.

Mr Brown said that the new rules on bankers' remuneration would ensure that there were “no more rewards for failure”.

The international financial regulatory system will be extended to cover all systemically important institutions — including some hedge funds and other elements of the so-called shadow banking system. A new financial stability board will be established to work with the IMF to spot developing risks in the financial system.

On trade, there were commitments not to retreat into protectionism and to reach a conclusion on the stalled world trade talks — although there is no timetable.

Mr Obama said: “The whole world has been touched by this devastating downturn and today the world's leaders have responded with an unprecedented set of co-ordinated actions.” He said he had come to London to listen and learn, as well as provide leadership, reiterating that America accepted its share of responsibility for the economic crisis and needed to show humility.

Mr Obama compared the world economy to a sick patient who had been stabilised with the right medicine. “There are still wounds to heal, there are still emergencies that can occur but some pretty good care is being applied,” he said.

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