France and Germany agreed a British-style plan last night to head off financial meltdown by spending billions of euros to guarantee loans and the survival of leading banks.

After a briefing from Gordon Brown in the Élysée Palace, President Sark- ozy and Angela Merkel, the German Chancellor, agreed a joint pledge with the 13 other leaders of the eurozone to recapitalise banks and guarantee lending between them. “This needs concrete measures and unity: that is what we have today,” Mr Sarkozy said. “This plan addresses all aspects of the financial crisis,”

His comments followed a weekend of transatlantic action to relaunch confidence in a financial system that came close to a standstill last Friday.

The leaders, who spent three hours thrashing out details of their package, are to announce the size of their promised bailout today. Some leaders, including Yves Leterme of Belgium, wanted a figure attached to the package before markets opened in Asia last night, but Mr Sarkozy insisted that another 24 hours was needed for governments to organise their actions.

“What we need now is for each country to fix the sum that it wants to put aside. This should happen by Wednesday,” Didier Reynders, the Belgian Finance Minister, said. EU leaders are expected to endorse the package in Brussels on Wednesday.

The agreement stops well short of a central EU rescue fund that was floated by France ten days ago. but the accord on broad pan-European guarantees marks a shift from Germany’s insistence a week ago that each nation should take care of its own crisis.

“People have come a long way to reach this accord,” said Mr Sarkozy. “The crisis has over the past days entered into a phase that makes it intolerable to opt for procrastination and a go-it-alone approach.” The leaders pledged to help or directly subscribe to debt-raising by banks for periods of up to five years to complement efforts by the European Central Bank to unfreeze interbank lending markets.

Mrs Merkel said the deal would send a signal to panic-stricken markets but should not be seen as a blank cheque. “The capital that we are providing to banks comes with conditions, because taxpayers have the right to expect that if they are contributing to the stability of the financial system that this will be honoured,” she said.

“Tomorrow Germany will get to grips with its package of measures. We will do this together with France.”

The French President, whose country holds the rotating chairmanship of the European Union, called the pact an historic bridge between the European and the “Anglo-Saxon” system. “We had no difficulty in agreeing with Britain. It was historic to invite the British Prime Minister to a session of the eurozone,” he said.

Mr Sarkozy said he hoped that the rest of the 27-member union would sign up to the measures in Brussels. He also hopes to persuade the United States to agree to an international summit to draw up a new framework for the world financial system, he said.

Mr Brown said that he believed that “in the next few days confidence in the banking system will be restored”. He added: “This is an important moment for the world economy. The decisions we take over the next few days will affect us for the years ahead.”

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