Gordon Brown has announced a landmark deal with France and Germany to boost investment in research and development.

The chancellor was expected to sign the agreement at a meeting of EU finance ministers in Luxembourg on Tuesday.

He was set to put his name to a joint letter pledging to spend hundreds of billions of euros on science, technology, transport and telecoms.

"Europe is suffering from unsatisfactory growth in its long-term productive potential and the present economic climate continues to be weak," the letter warns.

"Action is needed to support long-term growth potential in key areas, notably in trans-European network projects."

Brown believes that working with countries such as France and Germany, rather than trying to compete against them, will boost a vital area of Europe's industrial sector.

And it will cut the gap with international rivals such America and Japan.

Whilst there will be investment from the three governments, the burden will fall on business to come up with the bulk of the £153 billion needed.

The letter also calls for a review of how the EU spends its money.

"We should achieve spending which better benefits growth, while meeting the budget ceilings we have adopted under the current financial perspective," it says.