Cameron calls for ‘swift action’ as FTSE plunges

London’s leading share index, the FTSE 100 index, closed down more than 4 per cent – its worst drop since November 2008 – on worries over the US economy and fears that the eurozone’s economy has almost flatlined.

The share slide comes as European leaders are struggling to stay ahead of the debt crisis which has already moved from Greece to threaten Italy and Spain.

The International Monetary Fund (IMF) has urged politicians to take “swift and bold action” to help with the lack confidence that is further hampering the recovery from the financial crisis.

Prime Minister David Cameron echoed the IMF’s warning to Channel 4 News’ Washington Correspondent Matt Frei.

Mr Cameron said: “What we need is for eurozone countries to come together and to act decisively, the first step is to complete the Greek programme they’ve already put in place.

We cannot go on kicking the can down the road. There’s got to be decisive action. Prime Minister David Cameron

“We cannot go on kicking the can down the road. There’s got to be decisive action, swift action to deal with this issue,” he added.

As the markets slumped, Mr Cameron put his name to a letter to the G20 alling for swift action to resolve the eurozone debt crisis and to put America’s public finances on a sustainable path.

Mr Cameron told Channel 4 News: “Every country has got to face up to its own problems and difficulties and deal with them, whether that is debts in the Eurozone, whether it is problems in banks, whether it’s dealing with our deficits – every country has to do that.

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“And that’s why I’ve come together with leaders of countries in the G20 but as diverse as Mexico, Canada, Australia, South Korea and signed a letter to President Sarkozy, who’s leading the G20 this year, to make exactly that point – face up to the debts, to face up to the deficits, face up to the problems. Every country in the world has got to do that in a coordinated way so we can get growth moving.”

The letter read: “The barriers to action are now political as much as economic. We must send a clear signal that we are ready to take the actions necessary to maintain growth and stability for all for the future.”

Meanwhile, Robert Zoellick, the head of the World Bank, said while he thought a double-dip recession for the world’s major economies was unlikely, his confidence was being “eroded daily by the steady drip of difficult economic news”.

He added: “The world is in a danger zone. In 2008 many people said that they did not see the turbulence coming. Leaders have no such excuse now and dangerous times will call for courageous people.”

Mr Zoellick said Europe, Japan and the US must act to address their big economic problems before they become bigger problems for the rest of the world. “Not doing so is irresponsible,” he added.

My confidence is being eroded daily by the steady drip of difficult economic news. President of the World Bank

The Dax in Germany dropped 5 per cent while France’s CAC-40 fell 5.3 per cent as a similarly shocking performance unfolded on Wall Street, where the Dow Jones Industrial Average was 3.6 per cent lower.

The pound hit a one-year low against the dollar, dropping as low as 1.53, as the US Federal Reserve chairman Ben Bernanke warned that there were “significant” risks to the US economy.

The grim outlook from the Fed – which pointed to weakness in the US labour and housing market – was the latest shock to already volatile global markets, most recently shaken by financial uncertainty in Greece, which is verging on a debt default.