Osborne's first G20 'unlikely to see progress' on global bank levy

British officials are downplaying the chances of major breakthroughs on banking reform at the G20 summit beginning today in the South Korean city of Busan, which will be Chancellor George Osborne's first major outing on the international stage.

Having made a dramatic start on the task of cutting Britain's budget deficit – proportionately the largest in the G20 group of industrialised nations – with £6bn of immediate cuts announced last week, Mr Osborne is thought to be keen to stress to his counterparts the need to reduce deficits in those countries that have had the worst record on controlling borrowing.

At the same time, Mr Osborne also wishes to see the surplus nations in the G20, such as China, do more to boost domestic demand and consumption and reduce the massive trade surpluses they run with the US and Europe. These "global imbalances", especially in Sino-American trade, are blamed by many economists as the cause of the financial crisis and ensuing recession.

Successive G20 communiqués have called on member states to co-ordinate the elimination of such imbalances, but with comparatively little impact. If anything, tensions between the White House and Beijing have heightened recently, complicated by Chinese diplomatic support for North Korea.

Although there is a broad consensus on the need for nations such as the UK to trim their borrowing, some figures in the US administration, such as Barack Obama's economic adviser, Larry Summers, have wondered aloud about the dangers if all the world's major economies deflate at once.

British officials believe the chances of any swift international agreement on the various plans for bank levies now being floated are limited. The full G20 heads of government summit, which David Cameron will attend in Toronto on 26 June, will probably be the forum where the final shape of an global agreement is forged.

The coalition has indicated that, if necessary, Britain will unilaterally impose such a levy if international agreement is taking too long. Yesterday, the business secretary, Vince Cable, repeated the Government's support for "a levy on the banks to reflect the fact that, at least until banks are made safe through structural reform, the taxpayer is providing insurance: protection for which the banks should pay".

Splits on the wisdom of a global bank levy persist even after the International Monetary Fund (IMF), at the request of the G20, published its proposal for two new taxes earlier in the year.

"I don't think we're on the verge of a global consensus on bank levy yet," the US Treasury Secretary, Timothy Geithner, said in Seoul yesterday. "There is not universal support for that across the G20, at least at this stage. And I don't think that's going to change in Korea."

The IMF is likely to be asked to continue working on its proposals. It proposed two bank taxes in April but the G20 asked it to refine its ideas following opposition from some countries, such as Canada, Brazil and China.

Other structural reforms to the banks, especially on the "too big to fail" issue, are also likely to be discussed, but again progress is glacially slow in the face of international disagreement on how to go about it.

The meeting will ask the Financial Stability Board (FSB) – a "club" of international financial regulators and central bankers – to consider new measures to improve transparency in the $615trn off-exchange derivatives sector, hedge funds and credit ratings agencies. The German and French governments have been especially vociferous in attacking these financial interests.

Apart from the Treasury team, the UK will be represented by the Governor of the Bank of England, Mervyn King and one of his Deputy Governors, Charlie Bean.

News
The surrealist comedian at the Q Awards in 2010
people
News
Russell Brand arriving for the book launch in East London
peopleRussell Brand cancels his book launch debate due to concerns about the make-up of the panel
Sport
Christiano Ronaldo enjoys his opening goal
champions leagueLiverpool 0 Real Madrid 3: Ronaldo and Benzema run Reds ragged to avenge thrashing from their last visit to Anfield
Arts and Entertainment
Awesome foursome: Sam Smith shows off his awards
music22-year-old confirms he is 2014’s breakout British music success
PROMOTED VIDEO
Life and Style
Six of the 76 Goats' cheese samples contained a significant amount of sheep's cheese
food + drink
Arts and Entertainment
Contestants during this summer's Celebrity Big Brother grand finale
tvBroadcaster attempts to change its image following sale to American media group
Extras
indybest
Arts and Entertainment
Sir Nicholas Serota has been a feature in the Power 100 top ten since its 2002 launch
art
Arts and Entertainment
Sarah Dales attempts to sell British Breeze in the luxury scent task
tvReview: 'Apprentice' candidate on the verge of tears as they were ejected from the boardroom
News
Call me Superman: one of many unusual names chosen by Chinese students
newsChinese state TV offers advice for citizens picking a Western moniker
News
ebooksAn unforgettable anthology of contemporary reportage
News
Wilko Johnson is currently on his farewell tour
people
Voices
New look: Zellweger at Elle's Women in Hollywood awards on Monday
voicesRenée Zellweger's real crime has been to age in an industry that prizes women's youth over humanity, says Amanda Hess
News
Let’s pretend: KidZania in Tokyo
educationKidZania lets children try their hands at being a firefighter, doctor or factory worker for the day
Life and Style
CHARGE BOOSTER: Aeroplane mode doesn't sound very exciting, but it can be a (phone) hacker's friend. Turning on the option while charging your mobile will increase the speed at which your phone battery charges
techNew book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone
Arts and Entertainment
Julianne Moore and Ellen Page are starring together in civil rights drama Freeheld
film
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...

Trainee Recruitment Consultant Birmingham

£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...

Trainee Recruitment Consultants

£20000 - £25000 per annum + OTE £Competitive: SThree: SThree Group and have be...

Day In a Page

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker
Renée Zellweger's real crime has been to age in an industry that prizes women's youth over humanity

'Renée Zellweger's real crime was to age'

The actress's altered appearance raised eyebrows at Elle's Women in Hollywood awards on Monday
From Cinderella to The Jungle Book, Disney plans live-action remakes of animated classics

Disney plans live-action remakes of animated classics

From Cinderella to The Jungle Book, Patrick Grafton-Green wonders if they can ever recapture the old magic
Thousands of teenagers to visit battlefields of the First World War in new Government scheme

Pupils to visit First World War battlefields

A new Government scheme aims to bring the the horrors of the conflict to life over the next five years
The 10 best smartphone accessories

Make the most of your mobile: 10 best smartphone accessories

Try these add-ons for everything from secret charging to making sure you never lose your keys again
Mario Balotelli substituted at half-time against Real Madrid: Was this shirt swapping the real reason?

Liverpool v Real Madrid

Mario Balotelli substituted at half-time. Was shirt swapping the real reason?
West Indies tour of India: Hurricane set to sweep Windies into the shadows

Hurricane set to sweep Windies into the shadows

Decision to pull out of India tour leaves the WICB fighting for its existence with an off-field storm building
Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?