Monday, June 28, 2010

G20 summit backs UK Budget, says David Cameron



World leaders at the G20 summit in Canada have backed the UK's "tough but fair" Budget, David Cameron has said.

The prime minister said his measures to slash spending and rein in Britain's deficit were endorsed in a communique.

Leaders of the world's major economies ended the meeting in Toronto by reaffirming an earlier commitment to halve their deficits by 2013.

Their final agreement allows countries to adopt differing economic policies to match their own priorities.

It also lets individual nations decide for themselves how to deal with the banks.

'Tough and courageous'

The communique acknowledged that countries with large budget deficits, like the UK, needed to "accelerate the pace of consolidation".

It stated: "It is clear that consolidation will need to begin in advanced economies in 2011 and earlier for countries experiencing significant fiscal challenges.

"There is also a risk that the failure to implement consolidation where necessary would undermine confidence and hamper growth."

In a reference to England's exit from the football World Cup, Mr Cameron told a press conference that it had been a "busy weekend... one which has brought many positive outcomes for Britain, if not on the football field then here at the summit".

He said the talks were designed to co-ordinate growth across the world.

"For some people, particularly countries like Britain with the biggest budget deficit in the G20, that action has to be fiscally consolidated, it has to be sorting out our debts and our deficit so we get confidence in our economy," he said.

"What the G20 has agreed is that this is not an alternative to growth, this is part of the global growth package.

"It's important that the countries with the biggest budget deficits accelerate that action... that is specific backing for the budget we have introduced."

He also said he did not expect the plans to be universally popular, and it was "tough and courageous... but necessary".

Mr Cameron came first face-to-face with US President Barack Obama at the summit for the first time since becoming prime minister.

He said: "I hope you will know what I mean when I say I thought the special relationship took off during the time we spent together."

He then played down suggestions that the US had clashed with Europe over the global economic recovery plans.

"It's a mistake to think this summit has been about a different approach between the Americans and Europeans," he said.

Chancellor George Osborne was also positive about the summit, saying there had been a "change of tone".

"People have understood the impact of the sovereign debt crisis and the necessity of countries to prove not just to international investors but to their own domestic populations that they have got serious, credible plans to live within their means," he said.

Last week the UK coalition government's first Budget announced a two-year pay freeze for public sector workers earning over £21,000 and substantial welfare savings including a three-year freeze in child benefit, a cap on housing benefit and a reduction in tax credits for families earning more than £40,000.

Mr Osborne also said the main rate of VAT would rise from 17.5% to 20% from next January, but he raised the personal income tax allowance by £1,000.

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