UK proposals backed at finance summit

Government proposals to defer bankers’ bonuses and maintain fiscal stimulus have won approval at today's G20 summit.

The finance ministers of the world’s richest countries are backing the UK’s plans for global economic recovery.

A draft proposal outlining a system of deferred bonuses for bankers and continued public spending was agreed at today’s meeting in London.

The agreement is a victory for Gordon Brown and chancellor Alistair Darling who have been resisting calls, led by France, to cap bonuses, claiming they were unenforceable.

In the proposals bankers will be rewarded for long-term success with deferred payments, instead of upfront bonuses.

Speaking at the summit this morning Brown pledged an end to the system of payouts, which reward failure and encourage risk, saying they were ‘an offence’ to the taxpayer.

The G20 ministers’ draft communiqué has also adopted Brown’s calls to continue fiscal stimulus, despite forecasts of positive growth.

Some countries, including France and Germany, are already emerging from recession, and want to implement "exit strategies" to scale back the spending introduced to combat the downturn.

Brown heralded the tentative recovery, but warned world leaders that withdrawing measures too early would be an ‘error of historic proportions’.

He claimed the fiscal stimulus programmes of increased public spending and tax cuts had prevented the world’s economies plunging into depression on the scale of the 1930s and must be sustained into 2010.

He said: “It is clear in my view that too early a withdrawal of vital support could undermine the tentative signs of recovery we are now seeing and lead to a further downward lurch in business and consumer confidence, reducing growth and employment and worsening governments’ debt problems over the longer term.”

The finance ministers also agreed to address concerns over representation and voting rights of emerging economies within the International Monetary Fund and World Bank.

The draft proposals will go before the G20 summit of leaders in Pittsburgh, Pennsylvania later this month.

Source:The times