G20 deal on bank levy 'not looking good'
Published 26/06/2010 | 05:00
"THINGS are not looking so good" for a Group of 20 agreement on bank levies and a financial transaction tax, according to German Chancellor Angela Merkel during the Group of Eight summit in the Muskoka region of Canada.
She said it was "about time" for countries to reduce deficits as world leaders gather to discuss balancing economic growth and cuts in public spending.
Europe should ignore US calls for continued stimulus and stick to austerity plans at this weekend's meeting of the Group of 20 leading economies, prominent US economist John B Taylor said.
"You don't need extra stimulus packages right now," the Stanford University professor -- who created the famous 'Taylor Rule' to guide monetary policy -- said at a central bankers' conference in Oslo.
"That is an important message right now, especially with the G20 meeting."
US President Barack Obama is urging G20 nations to support the global economic recovery by focusing on growth, while Germany, France and the UK are focusing on reducing budget deficits.
"The debts and deficits are too large and will be a drag on the economy," Prof Taylor said. "It would be beneficial not to have additional stimulus, but try to move towards a budget consolidation. I think that would be good for the recovery."
Mr Obama said in a June 16 letter to his counterparts that they must avoid the "mistakes of the past" when economic support was withdrawn prematurely.
But Ms Merkel said "there is no alternative" to cutting deficits.
Meanwhile, protesters and community groups were intensifying their demonstrations in Toronto as downtown businesses closed down ahead of the weekend summit.
Oxfam brought in actor Bill Nighy yesterday to speak to reporters about shortfalls in aid and healthcare investments.