Obama Vows Budget Cuts While US and UK Mull Stimulus Packages

"If we are going to make the investments we need, we also have to be willing to shed the spending that we don’t need," he said.

President-elect Barack Obama, encouraged by congressional Democrats, will propose early next year an economic-stimulus package three times larger than one he was discussing only weeks ago, with the main focus on infrastructure, aides and lawmakers said.

The stimulus package is a fresh lifeline to consumers and is in addition to the $700bn (£460bn) rescue plan enacted by the US Congress last month - the largest US government bail-out in history.

At a press conference, US treasury secretary Hank Paulson defended the changes, saying there was no one response adequate by itself to deal with "a once or twice-in-a-century financial crisis".

Britain has unveiled a major economic stimulus package worth 20 billion pounds to reignite consumer spending and help the nation recover from a deep and painful recession expected next year.

Chancellor of the Exchequer Alistair Darling said he would cut tax on goods and services and would fund the plan -- worth 23 billion euros or 30 billion dollars -- by borrowing more and raising income tax on the wealthy from 2011.

The United States and Europe prepared fresh measures on Tuesday to tackle a sharp economic downturn, which top miner BHP Billiton cited in abandoning a $66 billion bid for Rio Tinto.

The Canadian economy is rapidly losing speed, and demands government action before the March budget is tabled, Flaherty said Monday.

He said any package could be included in a sooner-than-scheduled budget, although he did not give a specific date. His officials also suggested that announcing stimulus measures before the next budget is a possibility.

U.S. stocks also gave up early gains by midday as concerns arose about how the slowing economy will affect the technology sector. The Dow Jones industrial average was down about 20 points, or 0.2 per cent, at 8,420. The Nasdaq composite index fell 20 points, or 1.4 per cent, to around 1,450.