G20 comes to London again

Friday 4th September 2009

Finance ministers from the G20 are meeting in London today as Britain faces a tough fight to maintain a consensus on combating the global recession.

Yesterday Alistair Darling warned European economies it was too early to be considering "exit strategies" from fiscal stimulus packages.

But his comments came before economic forecasts showed the UK being left behind by other countries in coming out of the slowdown.

The Organisation for Economic Cooperation and Development (OECD) said G7 countries could expect growth to fall by 3.7 per cent in 2009 overall, an upward revision on its 4.1 per cent prediction in June.

Alone out of all the developed countries was Britain, however, in having its contraction forecast raised 0.3 points to 4.7 per cent.

"Governments will need to continue to stimulate their economies as rising unemployment and weak housing markets continue to dampen private demand," the OECD said.

"The current exceptionally low interest rates should remain in force for the time being, the assessment adds."

Mr Darling, who is holding talks with his G20 counterparts over the next two days, has made ensuring that countries had "delivered the commitments made at the London and Washington summits" as his main objective.

He hopes to find more common ground on the role of international financial institutions; macroeconomic conjecture and recovery; and the strengthening of the international financial system.

The chancellor has also called for "enhanced disclosure of levels and structure of senior staff pay".

A notable exception from the pre-meeting agenda is the developing world, which the G20 promised to provide $240 billion for in April.

Campaigners have maintained criticism of this total, however, after the World Bank said the developing world needed $635 billion needed "just to stand still".

International aid agency Oxfam is proposing a new series of measures it says will deliver $280 billion to the developing world with no extra burden on ordinary taxpayers.

It wants to raise $160 billion by reforming tax-havens, $89 billion by reallocating an International Monetary Fund bailout, and up to $50 billion through a currency transaction tax.

"The beauty of these proposals is that they allow the G20 to bailout poor people without asking ordinary taxpayers at home to put their hands in their pockets," said Max Lawson, the charity's senior policy adviser.

"Rich countries that spent $18 trillion bailing out banks should not be allowed to plead tight budgets as an excuse for failing to help poor people – especially when there are alternative sources of funding available that would cost them little or nothing.

"G20 finance ministers have a real opportunity to ensure that poor countries receive proper protection from a crisis they did nothing to cause. Millions more families are being forced to make impossible choices between buying life saving medicines, sending their girls to school or buying food for their next meal."

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