Berlin- As fears of recession grow, German Chancellor Angela Merkel is to meet this week with British Prime Minister Gordon Brown to discuss the financial markets crisis, her spokesman said Monday.

The two are to meet Thursday in London and speak to the media afterwards, spokesman Ulrich Wilhelm said. Merkel is also to pay a call at Buckingham Palace to visit Queen Elizabeth II.

Germany and Britain have unveiled the biggest rescues of banks outside the United States, but the moves have failed to counter a slide in world stock markets which is being seen as a harbinger of a global recession.

Merkel's coalition is debating pump-priming to counter the effects of a business contraction. Her Christian Democratic supporters have suggested cuts in motor-vehicle tax and an income-tax rebate.

Governments commonly increase their spending to ease the impact of a fall in consumer and business spending.

In Berlin, Finance Minister Peer Steinbrueck said he expected action this week or next.

Steinbrueck said he and his own Social Democratic Party (SPD) opposed tax cuts because taxpayers might simply move their gains into savings instead of spending them, or might import more rather than buying home goods.

Stressing the urgency of action, Steinbrueck said after meeting with his party in Berlin that tax cuts might also not gain traction till next year when many people receive their tax findings.

The finance minister said his party favoured job creation by encouraging municipalities to speed construction of kindergartens and schools and by lending money to the mittelstand, Germany's web of medium-sized companies.

Other options include soft loans and subsidies for new home-heating and home-insulation work. Those projects are popular in Germany as they also reduce oil and gas use and help cut carbon-dioxide emissions.

Steinbrueck, who has won praise in recent weeks as Germany's chief firefighter in the crisis, said he was also studying backing private investment in public infrastructure and European-level aid to car manufacturers.

He stressed that no decisions had been taken in the government yet on how to proceed. (dpa)