ST. ANDREWS, Scotland (AP) – The world’s top financial officials on Friday sought a blueprint for securing future global growth and worked to break a deadlock over who bears the cost of fighting climate change.
Even as the world emerges hesitantly from recession, finance ministers and central bankers from the Group of 20 leading rich and developing countries meeting here are likely to agree that it is too early to pull the plug on economic stimulus measures.
While Britain remains officially in recession, the US, Germany, and Japan have all recorded renewed growth and the 16-country euro zone is expected to do the same when figures are released next week.
British Treasury chief Alistair Darling, the host of the gathering, urged the group to maintain the collective approach forged in more dire circumstances at summits in London in April and in Pittsburgh in September, arguing that sustainable growth would only come from agreed action to increase trade and boost productivity.
Some countries are more eager to begin sketching out exit strategies to unwind the recent massive government spending, low interest rates and expansion of the money supply that are supporting the world economy. And the European Central Bank broadly hinted Thursday that it will soon begin cutting back some of its emergency lending to banks, ramped up during the finance crisis.
There are also disagreements on banking reform, with Canadian Finance Minister Jim Flaherty acknowledging on the eve of the meeting that there were “disparate views” on how to address the problem of banks being too big to fail. Britain is forcing major bailed-out banks to sell part of their business, while the U.S. has shied away from calls to break up major banks. Meanwhile, a French official said his country is worried that the momentum behind tightening rules on bonuses is flagging.
“There can be no room for complacency amongst G-20 countries this weekend,” Darling said in a speech in Edinburgh on his way to chair the grouping that represents around 90 percent of the world’s wealth, 80 percent of world trade, and two-thirds of the world’s population.
Darling acknowledged that plans for recovery must eventually be coordinated, but said “as we draw up our plans, we must accept that the biggest risk to recovery would be to exit before the recovery is real.”
The other key item on the agenda for the officials - holed up away from the blustering Scottish winds in a seaside golf resort - is tackling the financial cost of climate change.
With the major UN climate conference in Copenhagen a month away, Darling said that “heavy lifting” was needed to push through a deal on so-called climate finance, which would give developing countries funds to help them cut emissions by switching from fossil fuels to cleaner energy such as wind and solar.