Cameron joins world leaders in open letter to Sarkozy warning of economy at ‘pre-crisis levels’ and attacking US and Europe

Cameron joins world leaders in open letter to Sarkozy warning of economy at ‘pre-crisis levels’ and attacking US and Europe

Last updated at 6:45 PM on 22nd September 2011
http://www.dailymail.co.uk/news/article-2040641/Cameron-warns-Sarkozy-economy-pre-crisis-levels-attacking-US-Europe.html

A group of world leaders has warned that the global economy is at ‘pre-crisis levels’, and says that countries must ‘work together’ for recovery.

David Cameron has joined forces with the heads of five other G20 countries in an open letter to France’s president Nicolas Sarkozy.

The letter to Mr Sarkozy, host of the forthcoming G20 summit in Cannes, urged swift action to resolve the eurozone debt crisis and stabilise Washington’s finances.

The six signatories – the UK, Australia, Canada, Indonesia, Mexico and South Korea – warned that the G20 would have to find a path out of recession at its November meeting.

South Africa was involved in discussions about the letter and is understood to share many of the concerns voiced in it, but decided at a late stage that it was not ready to sign up.

‘For many advanced economies the path out of the deep and prolonged recession will be difficult,’ said the letter.

‘This will impact on growth in emerging markets, and there is more limited room for manoeuvre than in 2009.’

Mr Sarkozy said yesterday that the Cannes Summit should be used to help the world find a path back to economic growth.

Today’s letter backed his call and argued that this will require G20 leaders to act together in a coordinated way to address the issues which relate to their own countries – whether in reducing debt, tackling trade imbalances or strengthening banking systems.

Barriers to progress on restoring growth are now political as much as economic, said the letter.

Cannes will provide an opportunity for G20 members – who together represent 85 per cent of the world economy – to ‘commit to each other to take the actions we know are necessary’.

Three years after the G20 leaders first met to discuss the global financial crisis in 2008, its ‘reverberations’ are still being felt around the world, said the letter.

‘We need decisive action to support growth, confidence, and credibility,’ the signatories warned.

‘We have not yet mastered the challenges of the crisis. Global imbalances are rising again. External risks to the stability of our banks and our economies are reaching pre-crisis levels. And volatile and high energy prices are hurting our citizens and acting as a drain on world growth.

‘At the same time, the confidence of citizens, businesses, and markets has been damaged due to the lack of visible political will: this in itself is holding back the recovery.’

In a plea for a return to the kind of coordinated action seen at the height of the crisis in 2008/09, they added: ‘Only when we work together can we restore strong growth and the confidence on which it depends.’

The letter called for eurozone governments and institutions to ‘act swiftly to resolve the euro crisis’ by tackling debt and swiftly ratifying the bailout mechanism agreed in July.

And it called on the US and other high-deficit advanced economies to ‘overcome the remaining hurdles towards restoring medium-term fiscal sustainability’.

‘Countries with long-term debt problems must put in place and implement credible growth-friendly medium-term fiscal consolidation plans, differentiated according to each country’s own national circumstances,’ said the letter.

Meanwhile, it urged countries with large trade surpluses – such as China – to expand domestic demand, keep their markets open, increase exchange rate flexibility and refrain from competitive devaluation.

And it called for the completion of the Doha talks on trade liberalisation, which have dragged on for more than a decade. If a ‘credible plan’ to conclude Doha cannot be reached at Cannes, G20 nations should move to alternative approaches for strengthening the multilateral trade system.

In a TV interview, Mr Cameron warned that world governments had to ‘face up to the debts, face up to the deficits, face up to the problems.’

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