Brown warns G7 against protectionism

THE CHANCELLOR Gordon Brown has sounded a warning about the threat of a return to protectionism after this weekend's meeting of the Group of Seven finance ministers revealed deep differences between the leading industrialised nations on how to revive the world's flagging economy.

The United States and Britain rejected German calls for a global managed currency system, insisting that Europe needs to get its own house in order to ensure that the burden of absorbing the impact of the Asian crisis is more evenly shared.

Robert Rubin, US Treasury Secretary, said: "It seems that Europe needs to play a much larger role through fast growth and more open markets."

Finance ministers agreed that since they met last year financial market conditions "have worsened" and that the impact of financial crises is now felt "beyond the regions where the crises occurred".

The Chancellor said the growth outlook has fallen from 4 per cent two years ago to 2 per cent this year. "People are looking to Europe and Asia as well as the US to be the engine of growth."

He warned: "We are all agreed that there should be no return to protectionism. We are all aware that this is a testing year."

Mr Brown said that he wanted the new round of World Trade Organisation trade liberalisation talks to begin earlier than planned, saying this would be a good signal of the commitment of the major industrialised nations to free trade.

The G7 endorsed proposals from the Bundesbank president Hans Tietmeyer for a new Financial Stability Forum to act as an early warning system against destabilising financial crises.

The 35-strong committee, to be headed by the managing director of the Bank for International Settlement, Andrew Crockett, and composed of officials from the G7 countries, central banks and the main regulatory bodies, will start its work in April.

The forum would initially be limited to G7 members but may be widened later to include other countries.

Dr Tietmeyer said after the meeting that the forum was "not an absolute guarantee that there will be no crisis in the future.

"The [global financial] architecture improvement cannot be done by building one new building. We have to improve existing buildings."

The ministers also agreed to try and seek an agreement at this summer's G7 summit in Cologne on aid for highly indebted poor countries.

The Chancellor, who on Saturday tabled fresh proposals to speed up debt write-offs, welcomed the move. "It is the strongest statement we have on debt at a G7 summit," he said.

However, the unity on these specific issues was eclipsed by deeper divisions on the broader issues affecting world growth.

Alan Greenspan, the chairman of the Federal Reserve, the US central bank, dismissed the German idea of currency bans as unworkable insisting that the way to avoid currency crises was to pursue "sound policies".

While the US and UK got top marks for efforts to keep their economies on even keel, the Europeans were told they needed "an appropriate mix of macro economic policies and structural measures aimed at promoting strong and sustainable domestic-led growth and fostering employment".

A US official said afterwards, "in other words the current mix is not appropriate".

A jovial Oskar Lafontaine, the German finance minister who chaired Saturday's meeting, shrugged off the failure of his currency plan.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
a clockwork orange, stanley kubrick
The Tesco Hudl2: An exceptional Android tablet that's powerful, well-built and outstanding value

Life and Style
food + drinkAuthor DBC Pierre presents his guide to the morning after
Sarah Silverman (middle) with sister Reform Rabbi Susan Silverman (right) and sister actress Laura Silverman (left) at Jerusalem's Western Wall for feminist Hanuka candle-lighting ceremony
peopleControversial comedian stages pro-equality Hanukkah lighting during a protest at Jerusalem's Wailing Wall
Arts and Entertainment
The Bach Choir has been crowned the inaugural winner of Sky Arts’ show The Great Culture Quiz
arts + ents140-year-old choir declared winner of Sky Arts' 'The Great Culture Quiz'
Life and Style
food + drink
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas