Gordon Brown: A Statesman Abroad, Under Fire Back Home

It wasn't supposed to go like this. A week before the international summit that Downing Street hoped would cement Gordon Brown's reputation as the statesman leading the rescue of the global economy, he was to crisscross the world building an international agreement for his revival plan.

But instead of emerging as a visionary figure bestriding the world stage, the prime minister has been forced into embarrassing retreat by a coalition of an increasingly independent-minded chancellor, an uncharacteristically combative governor of the Bank of England and the cold-eyed verdict of the markets.

Gordon Brown appeared to back off pressing for a further fiscal stimulus in next month's budget after what was described, semi-mischievously, in the Commons yesterday as a coup by the governor of the Bank of England, Mervyn King. There will now be no big stimulus in the budget, if Brown had indeed ever been planning one. The failure of the government gilt sale yesterday - the first since 1995 - merely underlined this.

At the Treasury select committee on Tuesday, King said he felt there was little scope for a further big stimulus, remarks that clearly stung No 10, partly because they highlighted the already high level of UK government borrowing and partly because they made it more difficult to get a clear expansionary signal included in the G20 communique next week.

Brown probably did not yet have a specific stimulus package in mind for next month's budget, but at the very least wanted to keep his options open. As he tries to egg on other countries to do more, he does not want to be seen himself ruling out a stimulus for Britain. His close political ally and former Treasury minister Geoffrey Robinson said yesterday that Brown feels frustrated that world policymakers have been repeatedly caught behind the curve of this recession.

Vince Cable, the Liberal Democrat Treasury spokesman, was only being semi-ironic when he claimed at prime minister's questions that the governor of the Bank of England had mounted "a very British coup d'etat by sending his tanks down the Mall, effectively seizing control of the British economy through his command of monetary policy, and putting the government under house arrest".

William Hague, the shadow foreign secretary, challenged Labour's deputy leader, Harriet Harman, three times on whether the government favoured a stimulus in the budget. Harman, knowing it would be fatal to wade into the discussions between No 10, the Treasury and the Bank, did not answer.

But Labour MPs know the past 48 hours have been bad for Brown, not only because it looks as if he has been defeated by the Treasury, but also because it fuels the impression that he is bent on spending to save his political skin.

Senior Tories were chortling yesterday at the way in which the one-time Mr Prudence was now desperately piling all his chips on red. They chortled even more when the children's secretary, Ed Balls, said in an interview in the New Statesman: "Would I like to be chancellor at some point in the future? Of course I would."

In fairness to No 10, ministers close to Brown have been saying for weeks that the government has probably injected £100bn in stimulus if you include sterling depreciation, interest rate cuts, quantitative easing and the £20bn in the pre-budget report. In New York, Brown pointed out that King had signed up to a recent G20 communique that pledged to take whatever action was necessary in the downturn.

"What the issue is now is whether we are prepared, given what happens over the next few months, to do what is necessary to resume growth in the economy," Brown said. "If you put that question to Mervyn King he will say that we have got to be ready to take the action that is necessary to restore growth." But he indicated he and King might not be far apart when he made clear a fiscal stimulus was just one way of stimulating the economy.

"In Britain we are [stimulating the economy] in three ways. We're doing it by interest rates being incredibly low, we're doing it by our fiscal stimulus and we're doing it by what is probably not yet understood by the public as one of the most effective and quicker ways of getting activity moving in the economy - by quantitative easing. If you take these three changes that have happened over the last few months together, that is where you look for results."

There had been an expectation that Brown would use next week's G20 summit in London to win broad agreement for another fiscal stimulus. But Brown indicated that world leaders would now be adopting a more cautious approach.

He said: "Nobody is suggesting that people come to the G20 meeting and put on the table the budget they're going to have for the next year. What we are suggesting is that we have to look at what we have done so far ... I see consensus, not a disagreement on that."

Man of the World

Gordon Brown has embarked on an epic journey ahead of next week's G20 summit, taking in Europe, the US, Brazil and Chile.

It is an attempt to persuade world leaders that co-ordinated action is crucial to tackling the global economic slump.