The financial crisis felt so keenly in the US housing market and broader economy has become a global ailment -- and necessitates a global remedy -- according to a report on the British government's plans for financial market reform. "The world economy has been hit by a severe financial crisis, resulting in the worst global economic downturn for over 60 years," writes the Chancellor of the Exchequer Alistair Darling in an executive summary of the paper. "Triggered by difficulties in the US housing market that exposed the way that banks and other lenders had been underestimating real risks for too long," the report continues, "the crisis spread so quickly throughout global financial markets that banking systems around the world were severely destabilised. As a result, the impact has spread beyond the financial system, hitting economic growth, prosperity and jobs throughout the world." The paper explores actions to reform financial market regulation, including strengthening the UK's regulatory institutional framework to manage systemic, globally interconnected markets and firms. It also turns attention to the UK's part in dealing with firms seen as "too big to fail," identifying and managing systemic risk and working internationally to deliver global action on the current financial crisis. “Our central objective must be to ensure that -- as we come through the downturn -- we reform and strengthen our financial system and rebuild it for the future," Darling said, according to a statement from the HM Treasury. "With consumers that are better informed, financial institutions that are better managed, and markets that are better regulated.” In a testament to the interconnectedness and similarities between global powers, the UK report (available to download here) outlines various failures of UK regulators in managing the risks associated with an innovative financial sector. US regulators have come under fire in recent months for the same failings, which spurred long-reaching effects in the global financial markets. But brighter growth prospects in the US helped to drive a global gross domestic product forecast by Banc of America Securities-Merrill Lynch researchers. The BofA research team raised its global GDP forecast for 2010 to 3.7% from the previous 3.2% estimate. “Concerted government and central bank actions to pump money into key economies like the US and China are starting to show signs of bearing fruit. The US and China are expected to be the main forces behind a global recovery in 2010,” said Riccardo Barbieri, head of Banc of America Securities-Merrill Lynch international economics, global currencies and rates research. The US economy alone looks to post a larger growth next year than originally estimated, with BofA economists Lori Helwing and Drew Matus expecting a 2.6% growth, up substantially from a previous forecast of 1.8% on the heels of fiscal spending projects and a slight pick-up in the US housing market. Chinese growth, however, is expected to dwarf the US forecast, with BofA researchers expecting 9.6% growth next year, up from a previous estimate of 8.3%. Write to Diana Golobay.