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Wednesday 03rd of December 2008
November 16, 2008

G20 summit agree steps to boost global economy


by Kay Murchie
”G20

The leaders of the world’s 20 major economies have met to discuss the global financial crisis.

The G20 summit, which took place in Washington, saw the biggest gathering of presidents and prime ministers in nearly 10 years and brings together representatives of around 85% of the world’s economy.

With the eurozone in recession, unemployment in the US at a 25-year high and Chinese growth slowing, the global economy is faced with many challenges.

As a result, tax cuts and interest rate cuts are to play a major part in reducing the severity of the global recession.

Furthermore, reforms to the International Monetary Fund and World Bank will be discussed at the second G20 summit next year.

The need for ‘closer macroeconomic co-operation’ was agreed by world leaders who said fiscal measures should be used to encourage domestic demand.

According to British Prime Minister Gordon Brown, the meeting reached important conclusions about trade, financial stability and economic growth, while Germany’s chancellor, Angela Merkel, said a satisfactory outcome was reached.

However, analysts and campaigners were disappointed with the outcome and Carl Weinberg, chief economist at High Frequency Economics, said there was no clear pledge for co-ordinated tax and interest rate cuts.

The G20 comprises the G8 nations (USA, Canada, Japan, Britain, France, Germany, Russia and Italy) plus the European Union as a bloc, Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Saudi Arabia, South Africa, South Korea and Turkey.

In related news, the British Chambers of Commerce is expecting that the British Government will introduce a stimulus package of between £12 billion and £18 billion, in a bid to boost the economy. However, the BCC warns that if the package is inadequate or lacks credibility, then the recession could be worse.

It is expected that Chancellor Alistair Darling will announce fiscal stimulus measures in his Pre-Budget Report later this month.

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