'This Is the Day That We Came Together to Fight the Global Recession' Brown Hails World Leaders' Action Plan for Global Economic Recovery

Western Mail (Cardiff, Wales), April 3, 2009 | Go to article overview

'This Is the Day That We Came Together to Fight the Global Recession' Brown Hails World Leaders' Action Plan for Global Economic Recovery


Byline: Gavin Cordon ; AndrewWoodcock

GORDON BROWN last night hailed a comprehensive $1tn support package for the world economy which will see leading nations come together to "clean up" the banks and bolster the system of global regulation.

The Prime Minister said the deal agreed by the G20 leaders at the ExCel Centre in London's Docklands would shorten the global recession and save jobs around the world.

"This is the day that the world came together to fight back against the global recession, not with words but with a plan for global recovery and reform," he said.

"These decisions, of course, will not immediately solve the crisis, but we have begun the process by which it will solved." The agreement represented a diplomatic coup for Mr Brown after French President Nicolas Sarkozy and German Chancellor

Angela Merkel had threatened to scupper a deal unless there was tougher action to reform the global financial system.

In the event, both leaders proclaimed themselves satisfied with the outcome - which included new rules on bankers' pay and bonuses, a crackdown on tax havens and curbs on hedge funds.

Mr Sarkozy said "a page has been turned" on the "Anglo-Saxon" financial model, while Mrs Merkel said it represented "a very, very good, almost historic compromise".

US President Barack Obama said the agreement marked "a turning point in our pursuit of global economic recovery".

"By any measure, the London summit was historic. It was historic because of the size and the scope of the challenge that we face and because of the timeliness and the magnitude of our response," he said.

The news of the agreement prompted a surge of confidence of the Stock Exchange with the FTSE 100 closing up 169.4 points at 4125 - the first time in it broken the 4000 barrier in six weeks.

More soberingly, however, it also coincided with the announcement of 3,000 job losses in the UK, including 1,690 at Norwich Union Life in York and Norwich and 1,000 jobs at Bombardier's aircraft parts factory in Belfast.

A key plank of the deal is an injection of $1.1tn of additional resources for the International Monetary Fund and other international institutions - the biggest increase in their history, according to Mr Brown.

The IMF's resources will be trebled from $250bn to $750bn, while the special drawing rights made available by the IMF - which can be converted by national governments into currency to provide a swift injection of liquidity into their economies - will be increased by a further $250bn.

There will a $250bn trade support package through the World Bank, while lending to low-income countries by the multilateral development banks - including the World Bank - will be increased by at least $100bn.

Mr Brown said the new rules on bankers' remuneration - establishing "sustainable compensation schemes" - would ensure that there were "no more rewards for failure".

The international financial regulatory system will be extended to cover all important institutions - including some hedge funds and other elements of the so-called "shadow" banking system.

A financial stability board will be established to work with the

IMF to spot developing risks in the financial system and provide early warning of emerging problems.

Tax havens which refuse to accept international rules will face sanctions, with the Organisation for Economic Co-operation and Development publishing a list of those failing to meet the new standards.

On trade, there are commitments avoid protectionism and to reach a conclusion on the currently stalled world trade talks - although crucially there is no timetable.

Mr Brown also confirmed there would be a further G20 summit later this year - expected to be in New York in September - to monitor progress on meeting the commitments in the deal.

The massive increase in resources for the IMF and other international institutions is some compensation for Mr Brown and Mr Obama, who failed to win support for a fresh spending stimulus by governments.

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