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Brown to urge G20 - keep spending Brown urges G20 to keep spending
(about 2 hours later)
Rich nations must keep spending until the global economy shows "clearer signs of recovery", Gordon Brown is to say. It would be "a serious mistake" for rich nations to scale back plans to support the global economy, Prime Minister Gordon Brown has said.
Mr Brown will warn finance minsters from G20 nations it would be a mistake to scale back a $5tn fiscal expansion plan agreed at last April's summit. Mr Brown told a meeting of G20 finance ministers that despite "tentative signs of recovery", cutting spending could cause another "downward lurch".
The prime minister will also call for global "binding rules" on bankers' pay. He called on ministers to fully implement the $5tn fiscal expansion plan agreed at last April's summit.
The BBC understands Chancellor Alistair Darling will propose that in future bonuses be paid out over five years and only in stock options. Mr Brown also said there must be new global "binding rules" on bankers' pay.
France has suggested mandatory caps on bankers' bonuses, but the chancellor has described this as "unworkable". 'Exit strategies'
Mr Brown told the meeting at the Treasury that the global economy was now at a "critical juncture".
Germany and France, which are both officially out of the recession, want the G20 to start discussing "exit strategies", but Mr Brown warned against any such move.
He said it could lead to a reduction in growth and employment and "worsen governments' debt positions over the longer term".
"It is clear in my view that too early a withdrawal of vital support could undermine the tentative signs of recovery we are now seeing and lead to a further downward lurch in business and consumer confidence," he said.
Pay and bonuses cannot reward failure or encourage unacceptable risk taking Gordon Brown G20: Economic summit snapshot
"The stakes are simply too high to get these judgements wrong, so to decide now that it is time to start withdrawing and reversing the exceptional measures we have taken would in my judgement be a serious mistake.
"On the contrary with more than half of the $5tn fiscal expansion yet to start, I believe that the prudent course is for G20 countries to deliver these fiscal plans and the stimulus packages that have been put in place and make sure they are implemented in full both this year and next."
'Claw-back clauses'
Mr Brown also raised the issue of bankers' pay.
The BBC understands Chancellor Alistair Darling will propose later that in future bonuses be paid out over five years and only in stock options.
France and Germany have suggested mandatory caps on bonuses, but the chancellor has described this as "unworkable".
He has argued that banks might get round the rules by raising basic salaries, or operating elsewhere.
The BBC's business correspondent Joe Lynam said Mr Darling would instead propose a longer-term system of bonuses, with the bulk of the money paid in the final two years of a five-year period.The BBC's business correspondent Joe Lynam said Mr Darling would instead propose a longer-term system of bonuses, with the bulk of the money paid in the final two years of a five-year period.
Under his proposals, bonus agreements would also include claw-back clauses, allowing money to be recouped if necessary.Under his proposals, bonus agreements would also include claw-back clauses, allowing money to be recouped if necessary.
Mr Brown said there could be "no complacency" when it came to the global financial system.
Protesters called for more action to protect ordinary livelihoods
"We cannot accept a return to the past ways of governance," he told ministers.
"Specifically, pay and bonuses cannot reward failure or encourage unacceptable risk taking.
"It is offensive to the general public, whose taxpayers' money in different ways has helped many banks from collapsing, and is now underpinning their recovery."
'Confusion''Confusion'
The BBC's chief economics correspondent, Hugh Pym, said government sources accepted tensions over how to reform bankers' pay and bonuses were likely to remain unresolved at Saturday's meeting.The BBC's chief economics correspondent, Hugh Pym, said government sources accepted tensions over how to reform bankers' pay and bonuses were likely to remain unresolved at Saturday's meeting.
Do we continue our support, until we have clearer signs of recovery or abandon it now? Gordon Brown class="" href="/2/hi/in_depth/business/2009/g20/7897719.stm">G20: Economic summit snapshot The Conservatives have seized on a joint letter signed by Mr Brown and the leaders of the French and German governments that they must explore ways to "limit" bonuses.
While the French and German governments are pushing for formal restrictions on bankers' bonuses, Mr Darling has previously argued banks might get round the rules by raising basic salaries, or operating elsewhere.
Instead, Mr Darling has said the UK favoured measures designed to make sure banks had higher capital reserves and were geared more to long-term growth.
The Conservatives have seized on a joint letter signed by Mr Brown and the leaders of the French and German governments that they must explore ways to "limit" bonuses
The Tories say the prime minister and his chancellor have sent mixed messages on bankers' bonuses, and "confusion" about their economic policies were threatening the economy.The Tories say the prime minister and his chancellor have sent mixed messages on bankers' bonuses, and "confusion" about their economic policies were threatening the economy.
The whole question of bonuses is now likely to be left for world leaders to deal with at another summit in Pittsburgh later this month, our correspondent said.The whole question of bonuses is now likely to be left for world leaders to deal with at another summit in Pittsburgh later this month, our correspondent said.
'Exit strategies'
Mr Brown will also tell the ministers assembled for their formal meeting at the Treasury the global economy is now at a "critical juncture".
He will argue that an important decision now need to be made about continuing with the $5tn plan, or scaling it back now some countries' economies have shown signs of recovery.
Germany and France want the G20 to start discuss "exit strategies", but Mr Brown is concerned any such move might prove premature.
Protesters called for more action to protect ordinary livelihoods
He will ask: "Do we continue our support, until we have clearer signs of recovery or abandon it now?"
"To decide now that it is time to start withdrawing and reversing the exceptional measures we have taken would in my judgement be a serious mistake."
Protesters wearing masks of the G20 leaders gathered for a small demonstration in the City of London on Friday ahead of the meeting.Protesters wearing masks of the G20 leaders gathered for a small demonstration in the City of London on Friday ahead of the meeting.
Waving placards saying "Stop letting money rule the world," they called for ministers to do more to protect ordinary people from the impact of the global downturn.Waving placards saying "Stop letting money rule the world," they called for ministers to do more to protect ordinary people from the impact of the global downturn.