Belfast Telegraph

Tuesday 29 July 2014

UK Budget praised as G20 plans cuts

David Cameron holds a news conference on the last day of the G20 Summit in Toronto, Canada
Leaders wave during a group photo at the G20 summit in Toronto, Canada
David Cameron leads out the G20 leaders to pose for a 'family photo' in Toronto, Canada

The Government's decision to impose swift and deep spending cuts and tax increases to rein in Britain's record deficit has won international endorsement at the G20 summit in Canada.

A communique agreed by leaders of the world's major economies acknowledged that countries with large budget deficits, like the UK, need to "accelerate the pace of consolidation" and welcomed the announcement of plans by countries including Britain to get their finances under control.

Despite his pre-summit warning that over-hasty retrenchment risked tipping the world back into recession, US President Barack Obama singled out Britain's Budget for praise as a necessary and courageous action.

The document set non-binding targets for member states to at least halve their deficits by 2013 and see debt stabilised or falling by 2016 - both of which Chancellor George Osborne said would be achieved by the measures in his emergency Budget.

"It is clear that consolidation will need to begin in advanced economies in 2011 and earlier for countries experiencing significant fiscal challenges," said the communique. "There is also a risk that the failure to implement consolidation where necessary would undermine confidence and hamper growth."

The final communique released at the end of the two-day summit in Toronto papered over cracks between the G20 states, accepting that different countries will pursue policies of continued fiscal stimulus or consolidation depending on their individual circumstances.

The G20 also backed proposals for "significantly higher" capital requirements on banks to enable them to withstand future shocks of the kind which triggered the recent crisis - with details to be fixed at the next summit in South Korean capital Seoul in November.

And it agreed the need for the financial sector to "make a fair and substantial contribution towards paying for any burdens associated with government interventions", while stopping short of endorsing a global bank levy of the kind sought by some campaigners.

And the UK welcomed G20 support for a "balanced and ambitious" conclusion to the long-running Doha trade liberalisation talks, even though the document finally drops the December 2010 target for completion, which has long been regarded as unrealistic. Negotiators have been asked to bring a report on Doha to Seoul,

In a further boost for trade, the G20 states renewed commitments to avoid protectionist measures for another three years to 2013.

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