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Britain’s finance minister warns of double-dip recession

03 September 2009 08:51 (UTC +04:00)

Baku-APA-Economics. Britain’s finance minister warned Thursday international complacency risks plunging the world economy into a double-dip recession, in a stark message ahead of a G20 finance ministers’ meeting.
Chancellor Alistair Darling said governments must carry on spending to ensure the global economy returns to sustainable growth next year, after the worst financial crisis since the Great Depression.
"My view is that the biggest single risk to recovery is that people think the job is done," Darling said in an interview with The Independent.
"There is a real risk that either governments or people generally think ’We have done that, we are on the path to recovery’," he told the newspaper.
Removing government stimulus packages is expected to be on the agenda when G20 finance ministers meet in London from Friday, ahead of the G20 leaders’ summit in Pittsburgh later this month.
With Japan, France and Germany officially out of recession, minds are turning to coordinating the withdrawal of packages and government bailouts for banks -- although with caution.
British Prime Minister Gordon Brown warned this week that while the Group of 20 largest economies must show willingness to work together on the removal of fiscal and monetary stimulus, it was too early to embark on exit strategies.
Ahead of the G20 meet, France is also leading calls for a coordinated crackdown on bankers’ bonuses, blamed for excessive risk-taking in the financial sector, including for a mandatory cap.
Darling said he was wary of anything that amounted to a "global pay policy" but saw "no problem" with the French plans to claw back bonuses after three or four years if they were not justified by performance.
On the issue of spending, Darling is concerned that other nations, in particular France and Germany, will push for a rapid decline in stimulus spending, jeopardising recovery in Britain and around the world.
"A lot of obstacles" remained to be negotiated on the path to recovery, including rising oil prices and unemployment, he said.
"We are at a critical stage," he said.
Darling wants the G20 to take measures to combat unemployment, similar to a multi-billion pound jobs package introduced in Britain, to ensure the return to global growth does not fizzle out, the Independent said.
Darling reiterated his predication that Britain, which is struggling to emerge from recession, would return to growth around the end of the year.
The chancellor is expected to outline his concerns in a speech Thursday.
His comments came as reports said Darling would mount a campaign at the London summit to persuade the rest of Europe to meet a multi-billion dollar shortfall in financial pledges to the International Monetary Fund.
Darling is determined to ensure Europe meets its "fair share" of the extra 500 billion dollar funding that was announced at the G20 meeting in London in April, the Financial Times said, quoting sources.
European Union finance ministers agreed on Wednesday to raise the bloc’s contribution to the IMF to 125 billion euros (178 billion dollars). Source: AFP