Global action 'could shorten downturn'

The prime minister has told MPs that the economic downturn can be shortened through international action.

Giving a Commons statement following the G20 meeting of world leaders on Saturday, Gordon Brown said that "unprecedented global events" called for "unprecedented global action".

The leaders meeting in Washington had agreed on fundamental reforms to global supervision of the financial system, he said.

In future, supervision would be based around "the principles that Britain has been promoting of greater transparency, responsibility, integrity to avoid conflict of interests, better banking and international co-operation", he said.

He told MPs that the changes agreed included establishing international colleges of regulators, "bringing transparency to tax havens", converging accounting standards, and reviewing executive bonuses that "encourage excessive and irresponsible risk-taking".

Other measures aimed at increasing transparency would include full disclosure of toxic assets, and reforms to end conflicts of interest in credit rating agencies.

Finance ministers from the 20 developed and developing economies had been asked to draw up plans to be implemented by March 31 next year, Brown said.

The summit had also agreed a "broad and concerted international macroeconomic policy response," he told MPs.

And he hinted at tax cuts, expected to be announced at next week's pre-Budget report, saying: "Fiscal policy has an essential role to play alongside monetary policy in sustaining demand, with quick-acting measures to encourage a rapid impact with help for households and businesses."

He went on: "The downturn can be shorter and less deep if Britain takes action and if that action is matched elsewhere."

He said the summit had also signed an agreement to refrain from raising new trade barriers, while trade ministers have been told to agree the "outlines" for a successful conclusion of the stalled Doha trade round.

At the next meeting of the G20 in the spring - which could be hosted by Britain - Brown said the leaders would review "the wholesale reform of the international economic architecture built in 1945".

He concluded: "We pledge that with national and international action, real help in difficult times, we will take people through the downturn fairly."

'Tax con'

Brown was jeered by Conservative MPs for saying several times that the economic crisis had begun in America.

And responding to the statement, Tory leader David Cameron said he had now made the point so many times that it was "starting to sound ridiculous".

He said: "The real international consensus is that it's only the countries that have been fiscally responsible that are best placed to act now."

Britain's debt was not sustainable because its borrowing was the highest in the developed world, he said.

"Isn't that why in Britain more discretionary borrowing now, without knowing where the money is coming from, is bound to mean higher taxes later?"

He went on: "Tax cuts should be for life not just for Christmas. We need real tax cuts, not Labour tax cons."

During the following debate, former chancellor Ken Clarke accused the prime minister of using the G20 meeting as "cover" for short-term borrowing "for electoral as much as economic reasons".