Sir Nicholas Stern's report says failure to tackle climate change could reduce annual output by 10-20%

Failing to tackle climate change now could lead to an economic disaster, a major report out today will warn.

The Stern Report, due out this morning, is expected to say that climate change has to be tackled now and that damaging changes will be “difficult or impossible” to reverse. If not, the world economy faces an economic downturn comparable to the great depression of the 1930s.

The review, by former World Bank chief economist Sir Nicholas Stern, says that failure to act could reduce annual global output by 10-20% by the end of the century. Acting now, however, would cost just 1% of output.

Stern also advocates a doubling in research and development spending on energy to $20bn (£10.6bn) and much greater use of techniques such as carbon capture and storage.

Tony Blair said the report was “the most important report on the future which I have received since becoming prime minister”. He said: “The conclusions are a wake-up call to every country in the world. The report is clear: We are heading towards catastrophic tipping points in our climate unless we act.”

Chancellor Gordon Brown is expected to use the launch of the report to push climate change further up the international agenda. He is reported to have appointed Al Gore, former US vice president, as an adviser on green issues.

He is also expected also use it to push for stricter targets. In a letter to European Union leaders, the chancellor will propose cuts in carbon dioxide emissions of 30% by 2020 and of 60% by 2050.