Uncontroversial, though some, such as Silvio Berlusconi of Italy, would prefer policy to be run by the smaller G8 (currently chaired by Mr Berlusconi).
2. We face the greatest challenge to the world economy in modern times; a crisis which has deepened since we last met, which affects the lives of women, men, and children in every country, and which all countries must join together to resolve. A global crisis requires a global solution.
Again, unarguable. The latest authoritative forecast, from the OECD, points to a global economic contraction of 2.7 per cent in 2009, the worst since the Second World War.
3. We start from the belief that prosperity is indivisible; that growth, to be sustained, has to be shared; and that our global plan for recovery must have at its heart the needs and jobs of hard-working families, not just in developed countries but in emerging markets and the poorest countries of the world too; and must reflect the interests, not just of today's population, but of future generations too. We believe that the only sure foundation for sustainable globalisation and rising prosperity for all is an open world economy based on market principles, effective regulation, and strong global institutions.
Correct, as far as it goes. No country can easily pursue fiscal expansion on its own, and globalised financial institutions suggest some globalised oversight.
4. We have today therefore pledged to do whatever is necessary to:
• restore confidence, growth, and jobs;
• repair the financial system to restore lending;
• strengthen financial regulation to rebuild trust;
• fund and reform our international financial institutions to overcome this crisis and prevent future ones;
• promote global trade and investment and reject protectionism, to underpin prosperity; and
• build an inclusive, green, and sustainable recovery.
By acting together to fulfil these pledges we will bring the world economy out of recession and prevent a crisis like this from recurring in the future.
"To do whatever is necessary" includes doing little or nothing if you think action is not needed.
5. The agreements we have reached today, to treble resources available to the IMF to $750bn, to support a new SDR allocation of $250bn, to support at least $100bn of additional lending by the MDBs, to ensure $250bn of support for trade finance, and to use the additional resources from agreed IMF gold sales for concessional finance for the poorest countries, constitute an additional $1.1 trillion programme of support to restore credit, growth and jobs in the world economy. Together with the measures we have each taken nationally, this constitutes a global plan for recovery on an unprecedented scale.
The single concrete result of the summit. Recapitalising the IMF is a genuinely valuable move, reassuring the world that vulnerable nations will not be allowed to go bust. There is also much more money available to fund international trade. The IMF will be encouraged to create more of its own money – so-called "special drawing rights". That in turn means a global creation of money in the same way the Bank of England and the US Fed are attempting "quantitative easing". China may see a bigger role in the IMF. A fine success that Mr Brown has been working towards for a decade but, arguably, that could have been done through normal channels.
6. We are undertaking an unprecedented and concerted fiscal expansion, which will save or create millions of jobs which would otherwise have been destroyed, and that will, by the end of next year, amount to $5 trillion, raise output by 4 per cent, and accelerate the transition to a green economy. We are committed to deliver the scale of sustained fiscal effort necessary to restore growth.
This sounds a lot, but much of it is spent. Glaringly, there is no commitment to, say, the IMF goal that all nations commit to a further fiscal boost of 2 per cent of GDP – about $3 trillion. Germany won this fight but the US will resent that its tax dollars will be used to buy German goods with no reciprocal gesture.
9. Taken together, these actions will constitute the largest fiscal and monetary stimulus and the most comprehensive support programme for the financial sector in modern times. Acting together strengthens the impact and the exceptional policy actions announced so far must be implemented without delay. Today, we have further agreed over $1 trillion of additional resources for the world economy through our international financial institutions and trade finance.
Every advanced economy has boosted spending and cut interest rates like never before, showing they will not repeat the policy mistakes of the 1930s that gave us the Great Depression.
11. We are resolved to ensure long-term fiscal sustainability and price stability and will put in place credible exit strategies from the measures that need to be taken now to support the financial sector and restore global demand. We are convinced that by implementing our agreed policies we will limit the longer-term costs to our economies, thereby reducing the scale of the fiscal consolidation necessary over the longer term.
Most nations have "exit strategies" – tax rises and spending cuts – to reduce budget deficits, but few are credible. If launched too soon they could halt a fledgling recovery.
13. Major failures in the financial sector and in financial regulation and supervision were fundamental causes of the crisis. Confidence will not be restored until we rebuild trust in our financial system. We will take action to build a stronger, more globally consistent, supervisory and regulatory framework for the future financial sector, which will support sustainable global growth and serve the needs of business and citizens.
Major failures in the banking system did not help – but there are other causes, such as the vast trade deficit between China and the US that created the "great wall of money" which funded the credit boom and the banks' misadventures. This fundamental cause was hardly addressed properly, even in the sessions between presidents Obama and Hu Jintao. Still, the G20 are asking the banks to own up to their "impaired assets". Again.
15. To this end we are implementing the Action Plan agreed at our last meeting, as set out in the attached progress report. We have today also issued a Declaration, Strengthening the Financial System. In particular we agree:
• to establish a new Financial Stability Board (FSB) with a strengthened mandate, as a successor to the Financial Stability Forum (FSF), including all G20 countries, FSF members, Spain, and the European Commission;
• to endorse and implement the FSF's tough new principles on pay and compensation and to support sustainable compensation schemes and the corporate social responsibility of all firms.
The new Financial Stability Board could be seen as an embryonic global watchdog – or as another slow-moving collection of regulators. The attack on "rewards for failure" comes straight from the court of world public opinion, although as usual there are few specifics. Tax havens also come under attack but what the "sanctions" primed by the G20 will be remain to be seen.
20. We agree that the heads and senior leadership of the international financial institutions should be appointed through an open, transparent, and merit-based selection process.
The usual stitch-up whereby the head of the IMF is always European and the head of the World Bank American may come to an end – but when? They have been discussing this for years.
21. We reaffirm the commitment made in Washington: to refrain from raising new barriers to investment or to trade in goods and services, imposing new export restrictions, or implementing World Trade Organisation (WTO) inconsistent measures to stimulate exports. In addition we will rectify promptly any such measures. We extend this pledge to the end of 2010.
The pledge was not to introduce new tariffs and quotas on trade. The World Bank says that 17 of the G20 powers then went ahead and did precisely that. Domestic political pressures to protect jobs are becoming irresistible.
25. We are determined not only to restore growth but to lay the foundation for a fair and sustainable world economy. We recognise that the current crisis has a disproportionate impact on the vulnerable in the poorest countries and recognise our collective responsibility to mitigate the social impact of the crisis to minimise long-lasting damage to global potential. To this end:
• we reaffirm our historic commitment to meeting the Millennium Development Goals and to achieving our respective ODA pledges, including commitments on Aid for Trade, debt relief, and the Gleneagles commitments, especially to sub-Saharan Africa.
World Bank president Robert Zoellick recognises that falling world trade will hit the poorest and smallest nations hardest. Do the G20 want to see social unrest and immigration as a result of neglecting the "bottom billion"?
27. We agreed to make the best possible use of investment funded by fiscal stimulus programmes towards the goal of building a resilient, sustainable, and green recovery. We will make the transition towards clean, innovative, resource efficient, low carbon technologies and infrastructure. We encourage the MDBs to contribute fully to the achievement of this objective. We will identify and work together on further measures to build sustainable economies.
The Chinese will probably continue to build a power station a week, usually coal-powered. More countries are likely to follow Obama's lead in "greening growth", however.
29. We have committed ourselves to work together with urgency and determination to translate these words into action. We agreed to meet again before the end of this year to review progress on our commitments.
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