G20 summit agrees on deficit cuts by 2013
- 28 June 2010
- From the section Business
Leaders at the G20 summit in Canada have agreed to cut national budget deficits while endeavouring to promote economic growth.
Host Stephen Harper, the Canadian prime minister said short-term stimulus measures would be needed to get economies moving.
Correspondents note that every major G20 country had already committed to halve deficits within three years.
Proposals for a global levy on banks have been dropped, Mr Harper said.
Instead, that will be left to individual countries.
The head of the International Monetary Fund, Dominique Strauss-Kahn, said focussing on budget deficits was oversimplifying the problem, because the situation differed from one country to another.
He added that more robust growth was also needed, both to reduce unemployment and to lessen the burden of large public debts.
While the summit rejected applying a universal banking levy, it did press for banks to have a greater financial cushion to protect against any future crises.
The G20 agreed that banks must build up higher levels of capital and liquidity but it adopted a longer timeframe for this, saying 2012 should mark the start of the process, not the end.
Speaking to reporters after the summit, US President Barack Obama said tighter regulations, including bigger capital requirements for banks, would be addressed at the next G20 summit in Seoul, South Korea, in November.
"We must do everything in our power to avoid a repeat of the recent financial crisis."
Addressing a reporter's question, Mr Obama said he expected China's currency to rise in accordance with its recent commitment to let the renminbi float more freely against the dollar.
"A strong and durable recovery also requires countries not having an undue advantage. So we also discussed the need for currencies that are market-driven," he said.
"As I told President Hu yesterday, the United States welcomes China's decision to allow its currency to appreciate in response to market forces."
But China resisted including a line in the summit's final statement on its currency commitment, saying it was a sovereign matter.
David Cameron, attending his first summit since becoming UK prime minister last month, said the stalled Doha round of global trade talks may need to be broadened in order to make progress.
"I totally support the completion of Doha, but we are not making progress and we need to do things in a different way so that these eight years of negotiation can be brought to a conclusion," said Mr Cameron.
The group of 20 leading and emerging nations had been split over the pace of budget cuts.
US President Barack Obama warned against fast and deep budget cuts, fearing damage to global growth.
But European members, including the UK, France, and Germany, have already led moves to slash record public deficits, despite opposition from the United States which is expected to run a $1.3tn deficit in 2010.
Emerging economies such as Argentina and Brazil had worried that budget cuts in rich countries would hurt their export-dependent economies.
"If the cuts take place in advanced countries it is worse," said Brazilian Finance Minister Guido Mantega.
"Because instead of stimulating growth they pay more attention to fiscal adjustments, and if they are exporters they will be reforming at our cost."
Outside the summit venue in downtown Toronto, police and protesters clashed for a second day on Sunday.
The Canadian Broadcasting Corporation reported that police fired rubber bullets at one point to disperse a crowd of about 150 protesters.
On the margins of a major march through Toronto on Saturday, some black-clad and hooded protesters smashed shop windows and set alight at least two police cars.
Police arrested more than 500 people over the weekend.