MercoPress. South Atlantic News Agency

G20 meeting anticipates clash over government spending and banks

Mr Darling issued a stark warning to countries considering “exit strategies” from measures to stimulate their economies. He said: ”It is a bit early to say, 'How do we get out of this?'

In anticipation of the G20 Finance ministers meeting in London on Friday UK Chancellor Alistair Darling insisted that world governments need to keep spending to ensure recovery from the global economic crisis.

Mr Darling issued a stark warning to countries considering “exit strategies” from measures to stimulate their economies. He said: “It is a bit early to say, 'How do we get out of this?'

”You must have a plan that allows you to exit in a way that is consistent with allowing the economy to grow again. Don't for goodness' sake get out of them before you have completed the job.“

Mr Darling said: ”There are encouraging signs that the joint action we have taken in the last 10 months or so is having an effect. We are beginning to see the fruits of that action. But it is too early yet [to abandon it]. We must not get ahead of ourselves.“

The G20 meeting is expected to discuss a co-ordinated strategy of winding up financial support but will also focus on the risks taken by banks in the run-up to the financial crisis. French president Nicolas Sarkozy is leading calls for placing limits on banks, but Mr Darling said his plans would affect mainly US and UK big banks rather than smaller continental ones.

”The French would appear to restrict this [new] regime to a certain class of banks - large complex ones,“ Darling told London daily The Independent. ”I believe this policy should be good for all banks. What is good for one is good for the lot.“

Mr Darling's rallying call to keep spending was echoed by US treasury secretary Timothy Geithner, who said countries must continue to provide support until there were clearer signs of recovery. At a briefing for US reporters ahead of the London meeting, he said: ”We have come a long way, but we have got a long way to go. We need to make sure we are confident we have a strong recovery in place.”

Mr Geithner is also hoping to get broad agreement among major countries on the amount of capital reserves that banks need to hold to guard against losses. The US government hopes that US banks will not be put at a disadvantage if capital standards there are raised to higher levels than their competitors face in other nations.