The G20 summit in Toronto over the weekend can be judged a success by the relatively low standards of such international gatherings, suggests economic research firm IHS Global Insight.
The only concrete achievement from the weekend was a pledge to cut fiscal deficits and halt the growth of debt. Deficits would be halved by 2013 and the ratio of public debt to gross domestic product would be stabilized by 2016. IHS notes that these targets were put forward by Canadian Prime Minister Stephen Harper, backed by the UK and Germany. But even this modest agreement is couched as “expectations” rather than binding requirements, it notes.
The United States, along with Japan and India, resisted the imposition of binding fiscal targets, it notes. “The United States has also acknowledged the dangers of excessive debt, but it has stressed the need for a measured approach that does not throw the world back into recession,” it says. “U.S. president Barack Obama nonetheless endorsed the United Kingdom’s austerity budget, acknowledging that some nations have more room than others to provide stimulus.”
These targets are welcome, “but in reality most governments have already committed to compatible policy goals. Few significant shifts are anticipated, although hopefully the international scrutiny will prevent governments from undermining their own strategies,” IHS says.
There was even less achieved on financial regulatory reform at the summit, with policymakers agreeing that change is needed, but far from settled on what is required. IHS notes that “several governments pressed for a global bank tax at the summit, notably the United States, United Kingdom, and the European Union, but opponents including Canada and Australia managed to rebuff them.” Moreover, it says that the implementation timeline for the new capital adequacy framework for global banks was weakened, with some governments backing away from the target of 2012.
“Obama arrived at the summit fresh from securing a breakthrough in Congress on the overhaul of U.S. financial regulation — something that will be key to getting other countries to sign up to reform — but it did not produce fresh global momentum some had hoped for,” it says.
“The summit produced sufficient progress to be adjudged a success, but leaders have not committed themselves to new policies,” IHS concludes.
“Most significant instead was ‘agreement to disagree’ on the pace of fiscal consolidation, acknowledging that some countries need to prioritize deficit reduction earlier than others. There was also greater flexibility on the question of financial sector regulation. Governments are pressing ahead with ambitious overhauls, but implementation of common capital standards will take longer than originally envisaged.”
IE
G20 summit a modest success: report
Leaders agree on the need for financial regulatory reform, but are far from settled on what is required
- By: James Langton
- June 28, 2010 June 28, 2010
- 09:20