What’s going on? We seem stuck with Brown while the actual government is falling apart.
Jack Straw has been making a series of pronouncements on Lockerbie all tending to show Brown as shifty . On Friday he reignites the row over release of Megrahi by admitting that trade and oil were an essential part of the Government’s decision to include him in a prisoner transfer deal.
Then Darling suddenly finds his voice and says that one cannot cap bankers’ bonuses because it wouldn’t work- “not a practical proposition”. This came just hours after Brown had surrendered to Sarkozy-Merkel and said the opposite. And again Alistair Darling has promised to outline specific spending cuts this Autumn, saying ministers must "level" with voters. Brown refuses to contemplate cuts.
Osborne comments on the whole farce with considerable insight.
Christina
PS - The G20 meeting was swift and issued its communiquê before lunch - so they must have agreed it all in advance. Separately I will send Reuters report of this. -cs
TELEGRAPH
5.9.09
1. Gordon Brown warns G20 countries against reining in spending
Gordon Brown, the Prime Minister, has told G20 leaders that the world's leading economies will make a "serious mistake" if they fail to approve a £3 trillion investment package to boost the global economy.
By Ian Johnston
Speaking at the summit of G20 finance ministers in London, Mr Brown warned against "complacency or overconfidence" about the prospects for a swift return to sustainable economic growth.
He said that it would be an error for countries which appear to be emerging from recession to back away from the packages of state spending and tax reductions which they signed up to at the London Summit in April.
Less than half of the promised $5 trillion in extra support has so far been delivered, he pointed out.
The talks are already becoming overshadowed by an escalating row over the salaries and bonuses offered by banks.
The UK and US both dismissed a suggestion by French President Nicolas Sarkozy that there should be a cap on pay, but France's finance minister said it was "determined" to change the rules. [Oh no! The UK did NOT dismiss it. Indeed it agreed to it. Brown’s letter to the EU President said ““We should explore ways to limit total variable remuneration in a bank either to a certain proportion of total compensation or the bank’s revenues and/or profits” -cs]
Christine Lagarde, France's finance minister warned the country would take unilateral action if its proposals to prevent bonuses from luring bankers into the kind of excessive risk-taking which caused the global economic crisis were rejected.
The summit comes amid rising hopes of a recovery of the world economy after the International Monetary Fund reduced its predictions for the decline in global GDP and forecast increased growth next year.
But Britain is resisting pressure from Germany and other Euro-currency countries who are planning to moves towards an "exit strategy" that would see some of the planned anti-recessionary spending programmes being scaled back to cut rising national debts. [Brown wants to go on borrowing and spending. Were he to get the chance to do this the cost of that borrowing would soar and we would not be able to afford the rising interest payments. He’s utterly determined to wreck us before the election -cs]
The Treasury believes that such a move is premature and would put the fragile recovery in danger and increase the risk of a "double-dip" downturn.
Mr Brown told the G20 finance ministers that the summit takes place at "a critical juncture for co-operation in the global economy".
He said: "This is not the time for economic complacency or for over-confidence.
"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, reducing growth and employment and worsening governments' debt problems over the longer term...
"The stakes are simply too high to get these judgments wrong, so to decide now that it is time to start withdrawing or reversing the exceptional measures we have taken would, in my judgment, be a serious mistake.
"On the contrary, with more than half of the 5 trillion fiscal expansion yet to start, I believe that the prudent course is for G20 countries to deliver those 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."
Mr Brown was due to back reforms of financial institutions and banks, including "consistent binding rules on bankers' pay – with sanctions at national level for banks that do not play by them." [There’s no consistency in what he says - or at least what the media say he means! -cs]
The G20 leaders' summit in Pittsburgh later this month should agree on "far-reaching" reforms to make the banks "more accountable, more representative and more effective", he will say. [It was Brown that approved the large bonuses in a bank that is state controlled - RBS. He did not have to do so, so again he;s utterluy inconsistent. As for Barclays, HSBC they are independent of government and accountable to their shareholders which is why they are successful. Lloyds would have been there too until Brown forced them into a merger with the basket-case HBOS. There are Brown’s fingerprints all over this chaos -cs]
Mr Brown appeared to be aligning himself [see my first note above! He didn’t “appear” to do so, he definitely did so -cs] with fellow European leaders when he signed a joint letter with French President Nicolas Sarkozy and German chancellor Angela Merkel on Thursday.
It urged an end to "reprehensible" compensation practices within the banking industry and insisting that pay and bonuses should "encourage risk awareness for all staff involved in determining a financial institution's risk position". [That’s OK as a wish but not as a regulation -cs]
But differences over bonuses threaten to overshadow this weekend's summit, with Chancellor Alistair Darling warning that the cap proposed by Mr Sarkozy would be "unenforceable" and the US making no secret of its opposition. [Who’s in charge then ? Brown or Darling? -cs]
But French Finance Minister Christine Lagarde said: "Enforceability is a matter of determination because there are always ways to be found. And we are determined to change the rules.
"What happened 12 months ago was just horrible for our societies, it was horrible for our economies, and we are still suffering as a result.
"Nobody wants this thing to happen again and if we want to avoid a recurrence of the crisis, we need to change the rules.
"Everybody knows that the compensation of someone is a driver for that person's behaviour so we need to look at compensation.
"And frankly I would be surprised that the excellent common law system of the UK does not find ways to make the collective determination enforceable."
George Osborne: Electioneering is putting confidence in Britain's economy at risk
As G20 finance ministers meet in London today, the OECD is forecasting that the host country will be the only major economy to see no growth at all this year.
By George Osborne, Shadow Chancellor
So let us assume the other finance ministers are spared the usual Gordon Brown lecture and have a chance to focus on the real substance. There are three international priorities.
First, we need to start making real progress on reforming international financial regulation. I agree with Tim Geithner, the US Treasury Secretary, when he says that the key is stronger capital requirements — putting money aside in the good times.
This is something for which David Cameron and I have been arguing for 18 months now. International co-operation on bankers’ bonuses is also desirable.
At the moment we cannot even get co-operation between N0:10 and No:11 Downing Street, with Alistair Darling scuppering the Prime Minister’s deal with the French and Germans before the ink was even dry.
Second, the G20 should be driving for a new global trade deal. A commitment to complete the Doha round would provide a boost to the global economy. Yet the last G20 meeting in London went backwards on trade.
Third, we need to start setting out a credible exit strategy from all this support for the banking system and wider economy. The key here is to distinguish between necessary monetary stimulus and unaffordable fiscal irresponsibility. [Distinguishing those is the tricky bit! -cs]
Low interest rates remain the most powerful tool we have for supporting demand and ending recession. In contrast, Britain’s fiscal stimulus — in the form of the temporary VAT cut — is widely perceived to have been an expensive failure.
Indeed, by contributing to growing fears over the sustainability of our public finances it could even make things worse.
Those fears make Mr Brown’s message to the G20 that governments should go on another spending spree next year even more extraordinary. I share Mr Darling’s hope that we will come out of recession this year.
Yet that exposes the fundamental contradiction at the heart of the Labour argument. If they expect the economy to return to growth this year, how can they continue with large increases in public spending next year that the country cannot afford?
Most other countries are looking for ways to turn the spending taps off, not to open them up.
The answer has everything to do with the politics of an election and nothing to do with the economic interests of the British people.
Does anyone imagine that if there weren’t an election next year a British Government would be increasing spending by £30 billion at the same time as it is borrowing more than £170 billion? Of course not.
Like other countries, they would be starting to tackle the massive deficit and restoring international confidence in our economy. As it is, Mr Brown’s electioneering is putting that confidence at risk. He is endangering the jobs of others to protect his own.
That’s why a credible exit strategy starts with his exit from office.
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