UK: G20 vows to maintain pressure to ease economic crisis
By Katherine Haddon and Guy JacksonSun Sep 6 03:38:39 EST 2009
Sat Sep 5 17:38:39 UTC 2009
LONDON, Sept 5 AFP - G20 finance ministers have pledged to maintain emergency measures to reverse the global economic recession -- including action on bankers' bonuses -- saying the crisis is not over yet.
After a two-day meeting preparing for a full-blown summit later this month, they also vowed to clamp down on tax havens, and said they will not let up pressure "until recovery is secured".
"We remain cautious about the outlook for growth and jobs," they said in a communique on Saturday after a meeting in London which debated the winding down of fiscal stimulus following the world financial crisis.
"We will continue to implement decisively our necessary financial support measures and expansionary monetary and fiscal policies... until recovery is secured."
US Treasury Secretary Tim Geithner also urged caution, saying that while global economic growth is "underway" there remain "significant challenges" ahead.
On bankers' bonuses they agreed to take action to reward long-term not short-term success including the "effective clawback" of payments.
Their final statement called for "global standards on pay structure... to ensure compensation practices are aligned with long-term value creation and financial stability".
The agreement was an attempt to compromise and avert a clash between the United States and Britain on one side and France, Germany and other European countries on the other.
Experts say bankers' bonuses contributed to causing the near-meltdown in the world economy which erupted a year ago because they encouraged bankers to behave recklessly in the hope of earning massive windfalls.
Voters' anger over bankers' bonuses has been growing in recent months as some banks signal they are resuming the practice as the economic outlook brightens.
But the United States and Britain want to protect the status of Wall Street and the City of London as the world's leading financial centres and are strongly opposed to capping bonuses.
British finance minister Alistair Darling has dismissed the idea as "unenforceable" because top bankers would simply find other ways to reward themselves.
As the worst financial crisis since the 1930s eases with France, Germany and Japan all returning to positive growth, the G20 ministers also debated when to withdraw the emergency support pumped in to shore up economies.
British Prime Minister Gordon Brown said in his opening remarks it's too early to scale back the massive taxpayer-funded fiscal stimulus packages agreed at April's London summit which are credited with preventing a deeper crisis.
Such a move would be a "serious mistake" and now is "clearly not the time for economic complacency", he said.
"It's clear in my view that too early a withdrawal of vital support could undermine the tentative signs of recovery we are now seeing and lead to a further downward lurch in business and consumer confidence," he added.
More than half of the $US5 trillion ($A5.96 trillion) expansion pledged by world leaders to boost economies has yet to be delivered, Brown said, adding this should be put in place before any winding down.
His view has been echoed by leaders including Anders Borg, Finance Minister of Sweden, which holds the rotating EU presidency.
The meeting also considered greater regulation, with the US pushing for stronger capital and liquidity standards for banks so they can absorb any future losses without needing state help.
Among other key reforms on the table, emerging countries pushed for reform of the International Monetary Fund, giving them a bigger say to match their growing economic importance.
