Britain urges G20 to keep stimulus as London meeting opens

LONDON, Sept 5, (AFP) - It is too early to scrap emergency help for the world economy, British Prime Minister Gordon Brown told G20 finance ministers as their meeting opened Saturday, adding this would be a “serious mistake”.

Any such move could undermine the “tentative signs of recovery” said Brown, praised by many experts for leading the world response to the financial storm which erupted a year ago.

Britain's Prime Minister, Gordon Brown (C), makes his opening remarks at the beginning of the G20 Finance Ministers meeting at the Treasury, in central London September 5,

Finance ministers from the Group of 20 leading and emerging world economies have gathered in London to build a framework for agreement ahead of the Pittsburgh leaders' summit in the US later this month.

“It's 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,” Brown said. More than half of the five trillion dollar expansion promised by world leaders to boost economies has yet to be delivered, Brown said, adding this should be put in place before any winding down.

Many current growth forecasts are based on the assumption “that the effective global fiscal stimulus of 2010 will be of the same scale as 2009 so given the risks we face, this is clearly not the time for economic complacency,” Brown said.

“The stakes are simply too high to get these judgements wrong so to decide now that it's time to start withdrawing and reversing the exceptional measures we've taken would, in my judgement, be a serious mistake.”

Brown also talked up the need for action on bankers' bonuses, even though his calls have been outflanked by France, Germany and other European countries which want stronger action such as mandatory caps.

The issue threatens to split the meeting, pitching Britain and the US against France, Germany and the European Union. “Pay and bonuses cannot reward failure or encourage unacceptable risk-taking. “It is offensive to the general public whose taxpayers' money in different ways has (stopped) many banks from collapsing and is now underpinning recovery,” Brown said.