The weekly bout in the Commons between party leaders resumed today when the Prime Minister faced sober questions from both Cameron and Clegg on the economy. And in such extraordinary times as these, how could the focus be on anything else?

Iain Dale scored the results very highly for Clegg, marking Cameron at 6, Brown at 7 and Clegg on top with 8. Adjusting for bias, that probably means Cameron at 2, Brown at 3 and Clegg at 9.

Watch the exchange yourself on Youtube thanks to ukpolitico, or read the exchange according to Hansard after the more.

Mr. Nick Clegg (Sheffield, Hallam) (LD): I would like to add my own expressions of sympathy and condolence to the families and friends of those brave British servicemen who lost their lives during the summer recess in Afghanistan.

This is indeed a day of reckoning for the British economy. It is also a test for this House. We must show the British public that we can work together to halt the downward spiral in the British economy. That is why, speaking for the Liberal Democrats, I can confirm that we wholeheartedly support the Government package. When a ship is sinking, we send out the lifeboats. We do not argue about who has steered it into an iceberg—that is a debate for another day.

This is a national response to what the Prime Minister has rightly called a global crisis, so we need global responses, too. Will he give the House a bit more detail on exactly what he is doing to ensure that the European Union finally acts together? Will he and the Chancellor press the IMF later this week to provide support to Governments, such as Iceland’s, who are overwhelmed by the crisis and unable to cover the liabilities of their banks on their own?

You can watch the exchange for yourself below, thanks to ukpolitico on youtube; or you can click the more for the transcript from Hansard.

The Prime Minister: Once again, I am grateful for the right hon. Gentleman’s question, because it allows me to explain, if he will allow me to do so, what we are doing in concert with our European partners and what we want to see happen at a global level.

First, the co-ordinated cut in interest rates is an important signal that the world will come together to deal with this economic problem. I believe that it has come at the right time to show that the action that we are taking, the action that the Americans are taking and the action taken in other countries in Europe is action that is designed to solve together the problem we face.

The problem is that the banking system has been overwhelmed by the fall-out from the sub-prime market in the United States and the bad assets that have been taken by many banks. Our method of doing this is to strengthen the banks in our country. In America, they are trying to move those bad assets into a Government fund. We feel that what we are doing is best for the banking system here, so while action is co-ordinated, each country will choose different things to do.

On Friday, the G7 will meet and agree co-ordinated action on transparency, disclosure and how we deal with accounting standards. I believe that the changes such as the new colleges of supervisors that will regulate multinational companies across frontiers should come in immediately and be set up before the end of the year. There will be a meeting of the IMF on Saturday, which I believe will agree the same principles. Having talked to President Bush yesterday, I think that we will have an international leaders meeting soon to look at what we can do together.

We need to have responsibility and integrity at the heart of the global financial system. We need a global early-warning system and co-operation among regulators that, to be frank, we in Britain have tried for for years, but have not been able to persuade other countries to support. We will continue to see co-ordinated action on economic policy.

Mr. Clegg: I am grateful for the Prime Minister’s reply. I am sure that he will agree that although this package is hugely important, it is only one part of the jigsaw that needs to be put together to get the economy back on track. He has said, rightly, that this is a time for new thinking, not for old dogma, so does he recognise that struggling families facing huge bills need more money in their pockets now? Will he act to close the numerous loopholes in the tax system, which benefit only the very wealthy, and use that money to cut taxes for people on low and middle incomes, who need that money the most?

The Prime Minister: I am grateful to the right hon. Gentleman. Of course, wherever there are loopholes in the tax system we will act to close them, and have done so over the last nine years. He asks about money going to hard-working families in this country to help them through these difficulties. Every family—in fact, 22 million families, basic-rate taxpayers—will receive £120 as a result of the decisions made by the House to give a tax cut. Equally, at the same time, as he knows, pensioners will receive £250 in the next few weeks for their winter fuel. Pensioners over 80 will receive £400 to help with their fuel bills. We have also extended help to low-income families by increasing the social tariff numbers to half a million and more. We are trying to do more in that area. We are trying to deal with the unacceptable problems raised by pre-payment meters. We will legislate if necessary to stop the practice of discriminating against those on pre-payment meters and we will continue to do everything we can to help the hard-working families of this country.