Brown Seeks `Global Consensus' on Tax, Spending at G-20 Summit
By Mark Deen
Nov. 10 (Bloomberg) -- U.K. Prime Minister Gordon Brown will call on governments around the world to coordinate tax and spending policies to shore up a slowing world economy.
``We must use the power of multilateralism to establish a global consensus on a new, decisive and systemic approach to strengthening the global economy,'' Brown will say today, according to a text released by his office. After committing more than $3 trillion to bail out the banking system, governments must now turn to ``international co-ordination of fiscal and monetary policy,'' he will say.
Brown's comments, to be made in a speech to London's banking community, set out the U.K.'s position going into a meeting of world leaders in Washington Nov. 15. A coordinated program to trim taxes and boost spending would give Brown political cover to allow Britain's budget deficit to swell when the Treasury announces its plans in coming weeks.
There are already signs that other countries are ready to heed Brown's call. China, the world's fourth-largest economy, announced a 4 trillion yuan ($586 billion) stimulus plan yesterday, saying the funds will be used by the end of 2010 as part of a ``proactive fiscal policy.''
A similar message came yesterday from Sao Paulo, where finance ministers from the Group of 20 nations met over the weekend to lay the groundwork for the heads-of-state summit in Washington. Ministers agreed to act ``urgently'' to bolster growth as the world's leading industrialized economies battle recession, according to the G-20 statement.
Warding Off Recession
The push comes as Brown and Chancellor of the Exchequer Alistair Darling prepare to update the government's tax and spending plans this month or next. Brown has said he's ready to increase borrowing to ward off recession after the U.K. economy contracted in the third quarter.
Spending is already increasing as the inflow of tax receipts slows. Britain had its biggest budget deficit since 1946 in the six months through September and economists say the shortfall may reach 7 percent of gross domestic product over the next two years, more than double the 3 percent limit set down by the European Union.
Since March, Brown's government delivered tax cuts and spending increases worth 4.8 billion pounds ($7.6 billion) to give relief to low-income earners, delay an increase in fuel duties and to help homeowners with mortgages and stamp-duty taxes on property purchases.
`Emergency Tax Cuts'
``A package of emergency tax cuts'' would be the most effective way of ``increasing demand in the economy,'' Frank Field, a lawmaker with the ruling Labour Party, wrote in the Sunday Telegraph newspaper yesterday. ``Steering these cuts towards the poorest'' would ensure that most of the cash would be spent immediately, he said.
Field is a former welfare minister who earlier this year forced Brown to water-down plans to scrap the U.K.'s lowest band of income tax. In his newspaper article, he said that further tax cuts would also offer Brown a boost in popularity, perhaps enough to call and win an election in the first half of 2009.
An ICM Ltd. poll for the Sunday Telegraph showed Labour still trails the Conservatives, with 30 percent support compared with 43 percent for the Conservatives. At the same time, 40 percent of the 1,005 voters interviewed said that Brown is best placed to handle an economic crisis, compared with 38 percent for Conservative leader David Cameron. ICM conducted the poll Nov. 5 and 6. No margin of error was given.
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