02 April 2009
Statement on the G20 Summit
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Mr Speaker, with permission, I would like to make a statement about the G20 Summit held today in London.
Today leaders and finance ministers from countries all over the world have come together, in an unprecedented show of unity, to take action in the greatest economic crisis of modern times.
This crisis has deepened since the last G20 summit – and is now affecting the lives of people in every country.
So today we have agreed to do whatever is necessary to:
- Restore confidence and growth in our economies;
- Repairing the financial system and restoring lending;
- Strengthen regulation and supervision to rebuild trust in the financial system;
- Fund and reform the international financial institutions to overcome this crisis and prevent further ones;
- Promote international trade and reject protectionism;
- And, crucially, build an inclusive, green and sustainable recovery.
There are no quick fixes. But because of the progress we have made today, agreeing to work together, we can begin to restore confidence, save jobs and bring the world economy out of recession.
Mr Speaker, first, we agreed to deliver the scale of sustained fiscal effort necessary to restore growth.
It does not mean that all countries will act in exactly the same way or at exactly the same time – it means an agreement to take whatever action is necessary to restore growth.
And we are confident that the actions we have agreed today will accelerate a return to trade growth.
Since the Summit in Washington in the autumn, G20 countries have announced, and are now implementing, the greatest macroeconomic boost the world has ever seen.
The combined fiscal expansion, across the G20, will put an additional 5 trillion dollars into the world economy by the end of next year. This will save or create millions of jobs across the world this year alone.
Central banks across the G20 countries are also taking exceptional action, cutting interest rates aggressively in most countries, and using all levers available to put money into their economies, to support growth.
We have already made available significant support for individual banking systems – through liquidity, recapitalisation and dealing with problem assets – in line with our agreed framework for restoring lending.
And in all the actions to support the economy, there is a determination to ensure long-term sustainability, price stability, as well as exit strategies for governments’ involvement in the banking sector. Mr Speaker, the immediate cause of this crisis is a failure in the global financial sector and in global financial regulation. It is imperative that we rebuild trust and clean up the global banking system. As part of that, we must build stronger regulatory systems, which supports growth and serves the needs of people and business.
Domestic financial regulation must be reformed to promote integrity, guard against all types of risk, discourage excessive risk-taking, dampen rather than amplify financial shocks, and protect consumers and investors.
We also want a more globally consistent regulatory system.
To this end, we have agreed:
- To establish a new Financial Stability Board, with a wider group of developed and emerging countries;
- It will work together with the IMF to spot risks and provide early warning;
- To endorse and implement new tough principles on pay and compensation;
- To expand regulatory oversight to all systemically important financial institutions, including hedge funds;
- And we will also take action to protect the world’s financial system and our public finances by cracking down on tax havens – and we note that the OECD has today published a list of countries assessed by the global forum against the international standard for exchange of tax information.
Third, Mr Speaker, we must give international financial institutions, like the International Monetary Fund and the World Bank, the legitimacy and the power to provide surveillance and support.
It is crucial that emerging and developing economies can continue to receive the flows of capital on which they depend.
Over the past few years, some 70 per cent of world economic growth has come from these emerging and developing economies, and we must not let them down now.
We have agreed a trebling in resources available to the IMF from £250bn to $750bn.
We also support a substantial increase in lending of at least $100bn by the Multilateral Development Banks, including to low income countries.
And we have agreed to support an injection of a further $250bn into the world economy, increasing global liquidity through a greater allocation of IMF special drawing rights.
These steps will provide an additional $850bn of financing to support growth in developing and emerging countries, which will be able to continue trading with us and other G20 economies, in turn supporting global growth and employment.
Hand in hand with more resources will come reform of the IMF and the World Bank.
Emerging and developing countries need to be represented too – so we agreed that the next review of IMF representation should be concluded by January 2011; while World Bank reforms must be completed by next spring.
Mr Speaker, next, world trade has underpinned rising prosperity for half a century – and today it is falling for the first time in 25 years. So we have agreed to support international trade as a crucial driver of growth in countries everywhere.
International trade is currently being undermined by a shortfall of trade finance – on which 90 per cent of all world trade depends. So we have agreed today to make available over the next two year – not $100bn – but $250bn through G20 export credit and investment agencies.
So in total we have agreed over one trillion dollars of additional support for the world economy – and this will support trade, growth, and jobs.
We remain committed to reaching an ambitious and balanced conclusion to the Doha Development Round – as this could boost the global economy by a further $150bn a year.
Mr Speaker, the fifth element of the agreement today, is a commitment to help the world’s developing and emerging countries.
We reaffirmed our historic agreement to meet the Millennium Development Goals, and to each achieve our respective pledges on aid, debt relief, and development.
This action, and decisions, we have taken today will increase the resources available to low income countries by $50bn – for social protection and long-term food security, for example.
Mr Speaker, we will act and do everything possible to build a fair and sustainable recovery.
We agreed to make sure that, when we support our economies, we do so in a way that also protect the environment.
We will support investment in clean, innovative and resource-efficient low carbon technologies.
We will also support those affected by the crisis by creating job opportunities and through income support measures.
And we will protect employment by stimulating growth, investing in education, and active labour market policies, focusing on the most vulnerable.
Mr Speaker, this is an global crisis.
Today, there has been a global response.
We will play our full part.
And I commend this statement to the House.
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