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Darling denies rift with US over economy
Paul Waugh13 Mar 2009
Chancellor Alistair Darling today played down claims of a rift between Europe and America over plans to tackle the global recession.
As G20 finance ministers met in Brighton, Mr Darling struggled to maintain unity among Western nations wanting a coherent rescue plan
He tried to lower the temperature after France and Germany objected to a suggestion from new US Treasury Secretary Tim Geithner that all countries should have tax cuts and a spending boost worth two per cent of their national income.
Both Berlin and Paris are reluctant to get into deeper debt, but the Obama administration is keen to see other nations copy its own massive “fiscal stimulus”.
In a compromise, the White House announced overnight that it did not want to write a “specific commitment” or percentage into the G20 deal expected when the full summit convenes next month.
Mr Darling said people needed “to be realistic” about how much agreement could be achieved at the summit, given the large number of participants.
The Treasury is itself reluctant to be pinned down to a specific figure for a fiscal boost.
The forthcoming Budget may feature some measures to boost spending, but it is unlikely to include the major increase expected by some.
The Tories have seized on recent tensions between the Treasury and No 10 over the recession.
Downing Street today said it did not want the G20 to be “overly-prescriptive” and it was up to “individual countries” to decide what was best for their own economies.
The Prime Minister's spokesman added “Of course, there's going to be a debate about exactly what we do. If we all agreed now precisely on what we needed to do there wouldn't be any point having a meeting.”
The Chancellor is keen to focus instead on tougher regulation across the globe to prevent the future spread of financial chaos.
Mr Darling today said regulators should be allowed to monitor the overall financial health of institutions to stop them repeating the mistakes that triggered the credit crunch.
He also hopes to see an agreement on the regulation of the “shadow” banking system — such as hedge funds — and offshore tax havens.
Writing in the Wall Street Journal, the Chancellor said the IMF and World Bank need to be reformed and given extra resources to prevent the spread of financial contagion once a problem was spotted.
Mr Darling said that banks need to build up a “buffer” of cash in good years “so that when a downturn comes they are strong enough to continue lending to businesses and families”.
“This weekend should be the next important step on the road to global recovery,” he said.
Reader views (14)
Yes toughen the rules but toughen the rule enforcers too. What the Chancellor is trying to do for his PM is deflect criticism from the role he (PM) played for 10 years. The regulators failed in their duty and who created the so called tripartite regulatory framework... a certain ex-Chancellor who's been promoted for a job he didn't do properly!
- Toks, London, 16/03/2009 14:42
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Yes, of course, tighten regulation but it comes ten years too late. And yes, disband the FSA which was Brown's ineffectual poodle so that he could let the banks do what they liked and produce vast tax flows for him to waste. As to his and Darling's raft of reflationary recklessness, it has not and will not work - it's just a case of failed politicians trying to look as if they're doing something still listening too much to the financial sirens in the City who got us into this mess with their avarice and incompetence.
- Richard, Welling, Kent, 14/03/2009 09:46
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No. But is does need tougher rules on Goverment ministers and the PM in particular to stop them wasting our/your money. The cost of each one of their crazy, unsuccessful and wasteful scheme to be deducted from their salary, The failing NHS computer system should take away 20 billion for a start. Then the helicopters that were bought 10 years ago and are still in their hangers say another 20 billion?
- Albert Hall, hove england, 13/03/2009 17:51
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the world needs banks that get back to basics and stopping inventing new recipes for pie in the sky.
i doubt more convaluting dictates will hinder their callous drive to profits and further dreams of avarice for long. what politics can invent, crafty, clever and calculating fiscal minds that circumnavigate.
these would be masters of the universe will bend and shape any regulation to suit their vast profits.
- M.O'Brien, london.uk, 13/03/2009 16:58
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It is wonderful to see that our Pm and President Obama are speaking the very same language on the recession and economic rejuvenation
- Keith Price, Luton, England, 13/03/2009 16:33
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Bit late now to start saying this pity you and your Government did not do its job to start with. Pot calling the kettle black etc
- Mike, London England, 13/03/2009 13:15
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Door, horses, bolted!
- Wen, Oxfordshire, England, 13/03/2009 12:39
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Has anyone seen a horse? I asked Alistair Darling to close the barn door but he appears to have been too late.
- Bob, Cheam, 13/03/2009 12:28
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Not only are new rules needed for control over bankers' irresponsibility, but new rules are needed to tackle irresponsible politicians. There's the root cause. The whole current UK banking crisis could have been avoided if Brown had put proper safeguards in place. But no, for 12 years he was happy to see the banks lending left and right recklessly -- happy to see Harold Brown surfing in his suit and talking about 125% mortgages. Everything comes down on Gordon Brown's shoulders. And now he's trying to play the 'save the world' game -- for a dire situation of his own making.
- Phil Jones, London UK, 13/03/2009 12:21
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Previewing reforms to the FSA to be announced next week, Mr Darling said that in future banks need to build up a “buffer” of cash in the good years “so that when a downturn comes they are strong enough to continue lending to businesses and families”.
This is ground-breaking stuff! And he's only been in power for 11 years. I propose a new international prize for economics, in place of all those Nobel-prize winners who got us into this mess. You could call it the Micawber Prize for the Bleedin' Obvious.
- Mdj E10, london uk, 13/03/2009 12:13
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Yes regulation works. Just look at Australia. Regulation saved our financial system. If it was not for the drop in exporrts our country would be untouched by all this.
- Scott Grundy, Australia, 13/03/2009 11:57
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12 years too late. Does Mr. Darling or any of his fellow ministers, Labour MPs, or parliamentarians have bank accounts or companies in tax havens? I think I know the answer.
- Mick, London, England, 13/03/2009 11:24
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Ever since banks existed they have needed to be regulated. There is always a temptation to lend more than their reserves to increase business and generate more profit.
It is possible to do so on the basis that not all the customers will come into the bank on the same day and withdraw their funds, however once word gets out that the bank is in trouble that is exactly what happens. That is why the Bank of England is the 'lender of last resort' and should be ready to provide funds to any UK bank to prevent a run on the bank leading to bankruptcy.
The problem is that Gordon Brown introduced a system of regulation that was not effective when Northern Rock came under pressure. He did not react until too late. With the 'Tripartite' regulatory system still in place in the UK, any new system will mean that Gordon Brown 'light touch' regulation was wrong, and so he will not allow another system to be introduced.
- Manny Goldstein, London, UK, 13/03/2009 11:23
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dismantle FSA, they are not fit for purpose
- Nino, London, 13/03/2009 10:31
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