Election battle in US thrown into chaos as economy fears grow

McCain suspends campaign as economy fears grow, Obama says debate should go on

The race for the White House has been thrown into turmoil by the global financial meltdown when John McCain said last night he was suspending his campaign and returning to Washington to help forge a deal on a financial rescue plan by the weekend. It was a startling, high-risk gambit aimed at making his rival, Barack Obama, look flat-footed. Mr McCain also asked for a postponement of the first presidential debate, which was scheduled for tomorrow evening. It could backfire on him, however, if voters conclude he is afraid of the debate in the middle of an economic crisis.

Mr McCain made the move even as both presidential campaigns were working on a joint statement setting out their broad agreement on terms for the $700bn (£350bn) bailout of Wall Street now before Congress. Mr McCain indicated his belief, however, that the rescue package might fail in the face of growing opposition.

The manoeuvre could be awkward for Senator Obama. For now, though, he is having none of it, declaring at a hastily convened news conference that he intended to attend the debate in Oxford, Mississippi, as planned. He said it was "more important than ever" that voters have the chance to assess both candidates and that anybody aspiring to be US President should be able to do more than one thing at a time.

Mr Obama told reporters he had telephoned his opponent earlier in the day hoping they could present a common statement on the financial crisis. He said that two of them had not substantively discussed cancelling the debate, conceding that he and his campaign had been caught entirely by surprise.

Both candidates want strict controls on how the money is spent and want to ensure it does not end up rewarding the very executives who helped bring about the crisis in the first place.

Amid a mood of mounting crisis, President Bush was due to appeal last night for support for his $700bn rescue plan for Wall Street at a time when 55 per cent of Americans oppose spending their tax dollars rescuing failing financial firms. The package was been met with deep scepticism by Democrats and Republicans alike this week. Mr McCain and Mr Obama are under pressure to declare their hands on the details of the rescue package and both are manoeuvring to take political advantage from whatever outcome emerges.

Mr McCain made his surprise statement after speaking at former president Bill Clinton's Global Initiative meeting in New York yesterday. "I am calling on the President to convene a meeting with the leadership from both houses of Congress, including Senator Obama and myself," he declared. "It is time for both parties to come together to solve this problem."

While declaring the two candidates were in agreement "on some broad principles", Mr Obama said there was great concern about how the money was going to be spent. Taxpayers should be treated like investors he said, and be repaid once the crisis had abated.

He was also adamant that measures be taken to ensure that "innocent homeowners can stay in their homes," and that the rescue schemes do not turn into a "welfare programme for Wall Street executives".

Yesterday, fast-paced developments have also thrust Gordon Brown into emergency talks with other world leaders after he flew to New York, ostensibly to attend a UN summit on achieving the Millennium Development Goals and easing poverty in Africa.

Officials said Mr Brown was scheduled to meet the Prime Minister of China, Wen Jiabao, last night. While Mr Brown would meet leaders of other economic powers this morning, following a breakfast with hedge fund managers from Wall Street, there were no plans for the Prime Minister to consult directly with Henry Paulson, the US Treasury Secretary.

Pressure is growing for leaders of the main economic powers to hold a summit on the banking situation, if not this week in New York then in the coming weeks. Nicolas Sarkozy, the President of France, called for such a summit, possibly in November.

Britain's International Development Secretary, Douglas Alexander, conceded in New York yesterday that some of the UN's Millennium Development Goals were "off-track" – ensuring clean water in developing countries and guaranteeing all children access to schools.