Brown confident G20 will commit to growth

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Indy Politics

Prime Minister Gordon Brown said today he was confident world leaders at a global financial crisis summit next week would do "whatever it takes" to create growth and jobs.

He called on fellow Europeans to play a key role in reforming the financial sector and leading the world out of economic crisis in cooperation with the United States.

But Brown faced a warning from Bank of England Governor Mervyn King who said Britain's soaring budget deficit meant it would have to be cautious about any new fiscal stimulus package to lift the economy.

In a speech to the European Parliament, Brown called on Europe to take the lead to reform banking systems, set global standards for financial regulation and ensure every continent injected money into their economies to lift growth.

Brown said he believed the shared principles behind the US, British and wider European plans for cleaning up banks' balance sheets would help rebuild confidence and restore lending to the economy.

"I believe that we are seeing the biggest cut in interest rates the world has ever seen and seeing implemented the biggest fiscal stimulus the world has ever agreed," he said.

He called for a new, reformed International Monetary Fund which he said must have its resources doubled to at least $500bn and in which emerging economies would have greater representation.

During a debate in the European Parlament, Brown came under attack from leaders of right-wing parties who accused him of failing to get British debts under control in the good times.

"It is important that the world comes together to deal with this crisis. For us to sit apart, to be aloof, not to cooperate with other countries, is a recipe for failure," Brown said in response.

Brown hopes to persuade other big developed and developing economies at a G20 summit on 2 April to agree on ambitious new spending to lift the world economy out of recession, but King said Britain had little room for manoeuvre.

"I'm sure the government will want to be cautious in this respect. There is no doubt we are facing very large fiscal deficits over the next 2-3 years," King told a committee of legislators from Britain's lower house of parliament.

Brown was embarking on a diplomatic offensive to win support for his plans for the summit, which will try to help pull the world out of its worst downturn since the 1930s.

G20 leaders are divided over whether the summit should focus on further economic stimulus, favoured by the United States, or concentrate on boosting regulation as sought by European leaders.

Brown will later fly to New York for a meeting with United Nations Secretary-General Ban Ki-moon and then to Latin America for talks in Brazil and Chile.

Brown said he believed that the world could for the first time agree on the big changes necessary for coordinated action "that will signal the beginning of the end for offshore tax havens and offshore centres".

He said his message to Eastern European members of the European Union was, "We will not walk away from you at your time of need, but will do all that we can to be at your side."

However, he faced criticism at home where a former British cabinet minister said plans for the G20 summit were too ambitious and risked producing only "high-minded declarations and vague reassurances".

Former trade secretary Stephen Byers, an ally of Brown's predecessor Tony Blair, also said the summit may fail to register with the average voter.