G20 countries set to keep spending
MOSCOW/PARIS (Reuters) – World leaders will commit to keep spending to prop up their economies at a G20 summit next week, Russia said yesterday, while France appeared to tone down its rhetoric on the issue of bank bonus caps.
The Kremlin's economic adviser said leaders from the world's 20 largest economies agreed now was not the time to withdraw the trillions of taxpayers dollars deployed to counter recession, and would say so at the G20 summit Pittsburgh on September 24-25.
"I think the leaders will confirm, as did the finance ministers, that it is premature to drop these measures, but that it is necessary to think about formulating exit strategies," Arkady Dvorkovich told a news conference in Moscow.
The Pittsburgh summit, the third since the demise of Lehman Brothers a year ago raised fears of another Great Depression, is set to focus on tougher regulation of the finance sector and what comes next, now that there are tentative signs of recovery.
Russia, which has spent hundreds of billions of dollars on anti-crisis measures, says signs of recovery are too fragile and the economy still needs support.
It is also concerned that the recovery could falter if big economies like the United States, the euro zone, China and Japan unilaterally start to wind down stimulus policies.
The crisis began when the U.S. housing and sub-prime credit booms went bust, triggering a crisis in global financial markets in 2007 that gradually tipped the wider economy into recession.
Trade unions have urged the G20 leaders do more to help the 59 million people they say will lose their jobs in the crisis and are also demanding leaders deliver in Pittsburgh on promises to get tough with banks.
French Economy Minister Christine Lagarde said Paris would not demand a specific number, saying that she wanted simply something that laid out clear limits.
"We're not so narrow-minded to the point that we want a number," she said in an interview in the Wall Street Journal. "But we want something that can be nailed down to solid parameters ... something that effectively limits and frames compensation."
French President Nicolas Sarkozy has led calls for a G20 decision to cap bonus payments, putting himself and other leaders under pressure to deliver a voter-friendly result, and earlier giving three broad ideas for how this could be delivered.