PARIS, FRANCE - Formula One teams and world motorsports governing body. The FIA reached agreement on Wednesday over radically reducing costs in response to the present global economic crisis, FIA announced.

The agreement was reached after a four-hour meeting in Monaco between the Formula One Teams Association (FOTA) and FIA they were able to release a statement saying they had reached an agreement.

"An agreement was reached on measures to be taken in order to achieve the targets set by FIA for 2010," read the statement.

"FOTA put forward propositions that would see significant savings made for the 2009 season, while still maintaining Formula One at the summit of motorsport and strengthening the interest in it."

Max Mosley, president of FIA, had most notably proposed a single engine for all teams, made by Cosworth, and a standardised gearbox.

FIA did not specify if these particular recommendations had been accepted as they face opposition from several stables.

According to Mosley it would bring down spending by 80%, crucial at a time when Formula One has been hit severely by the economic downturn with Honda pulling out of the sport last week.

Earlier on Wednesday Mosley called for Formula One engineers to innovate as they try to ride the shockwaves caused by the global credit crunch which has seen Honda quit the business.

Having earlier in the week said that FIA had been aware for some time that Formula One was spending money beyond its means Mosley indicated that "engineers must get innovating again" or else risk seeing the business decay.

Mosley said: "what isn't working out in Formula One today wasn't working out before the economic problems came along. Essentially, these are the ever-stricter rules which limit the work of engineers to more and more restricted areas."

"Success in Formula One today consists of optimising each little bit of the chassis, which is ever more costly and completely absurd," Mosley said in addressing the opening day of the Motor Sport Business Forum.