Business

Geithner says US can 'no longer drive global growth'

  • 25 June 2010
  • From the section Business

US Treasury Secretary Timothy Geithner has told the BBC that the world "cannot depend as much on the US as it did in the past".

He said that other major economies would have to grow more for the global economy to prosper.

He also played down any differences in policy between the US and Europe regarding deficit reduction.

Mr Geithner was speaking in Washington ahead of G8 and G20 meetings this weekend in Toronto.

He said all members of the group were "focused on the challenge of [building] growth and confidence", and would be working to this end at the meetings.

The Group of Eight and Group of 20 rich and developing nations are assembling on Friday for three days of talks on emerging from the worst financial crisis since the Great Depression.

UK Prime Minister David Cameron, who has arrived in Canada along with other leaders, said in an article for the Globe And Mail newspaper: "No-one can doubt the biggest promise we have to deliver: fixing the global economy."

"I believe we must each start by setting out plans for getting our national finances under control," he added.

Common goals

Many European governments have implemented severe austerity measures in recent weeks in order to cut debt levels.

In a letter to G20 leaders last week, US President Barack Obama warned against cutting national debts too quickly as it would put economic recovery at risk.

But Mr Geithner said the US and Europe "have much more in common than we have differences".

"We all agree that we have to restore responsibility to our fiscal positions. Everyone agrees that those deficits have to come down over time to a level that's sustainable," he said.

But he said that the US and Europe would take "different paths, at a different pace" in order to reach the common goal.

"It's going to require different things as we have different strengths and weaknesses," he said.

Mr Geithner said the US was not in a position to work out what were the best policies for European countries to pursue.

'Strong growth'

The treasury secretary said the US had laid out "very ambitious plans as well" to cut its deficit.

But he said the US was in a stronger position than many other economies to cut its debt levels.

"We're in the very good position of being able to deliver relatively strong growth rates [compared] to what we're seeing in other major economies," he said.

Some commentators in Europe argue that austerity measures should only be introduced once strong growth has been secured in the wake of the global downturn.

This was a more widely held position until the Greek debt crisis focused policymakers' minds on cutting debt levels.

The Greek crisis showed that governments with high levels of debt find it very difficult to borrow money from international investors, money that they need to service existing debts.

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