British Prime Minister Gordon Brown has told a meeting of G-20 finance ministers in London that there is no room for “economic complacency” despite signs of a nascent global recovery.
Brown, who was the architect of the G-20 London Summit in April when world leaders agreed a $5 trillion global plan of coordinated action to bolster the world economy, said that cutting back on government stimulus programs would undermine confidence. Brown said less than half of the proposed $5 trillion had so far been injected into the economy and called on world leaders to agree a plan to ensure “durable” growth when they gather in Pittsburgh for the full G-20 summit later this month. “To decide now that it is time to start withdrawing and reversing the exceptional measures we have taken would in my judgment be a serious mistake,” Brown said. “On the contrary, with more than half of the $5 trillion fiscal expansion committed to, yet to be spent, I believe the prudent course is for G-20 countries to deliver the fiscal plans and stimulus packages they have put in place and make sure they are implemented in full both this year and next.” Brown’s warning comes with several major economies, including Germany, France and Japan, announcing that they have emerged from recession, prompting optimism that the worst of the most severe financial crisis since the Great Depression of the 1930s may have passed.
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Financial ministers, including U.S. Treasury Secretary Tim Geithner, were also expected to discuss banking reforms Saturday amid calls from some European countries for curbs on bonuses. Brown said that “far-reaching reform” of both international financial institutions and banks was needed to “to bring them into the 21st century and make them more accountable, more representative and more effective.” In an interview with CNN, Chancellor of the Exchequer Alistair Darling — the UK’s top finance minister — said there was “a measure of agreement that we do need to take measures to stop excessive risk-taking.”
Darling said systems of bonus payments needed to be more open to scrutiny, adding that possible options included having cash bonuses paid out over longer periods of time or paying bonuses in shares to tie them to the value of a company. But he said it was important not to stop rewards for hard work and said measures needed to be “global and practical.”