Saturday, 4 April 2009

G20 Summit

The G20 summit was a surprising success. World leaders meeting in London recently to thrash out a solution to the global economic downturn showed a great deal of unity. Together, they pledged $1.1 trillion in loans and guarantees to poorer nations. This is an unprecedented and staggering figure, and probably beyond the comprehension of most people. It also agreed a commitment to prop up tottering economies of developing nations through the International Monetary Fund, and pledges of a heavier regulation of international finance. The latter included pledges to remove tax havens and the bonus culture that is endemic in the institutions that have been largely blamed for the global crisis. This has to be a good thing. The days of laissez faire economics that has prevailed over previous decades may at last be coming to an end.

The promise of $1.1 trillion to help poor countries exceeded even the most optimistic of outside expectations. The money will help keep small nations from tumbling into deep crisis, essentially serving as a firewall to keep the recession from deepening, analysts have said.

However, one of the biggest stumbling blocks to the recovery process is the banks. They have shifted from lending irresponsibly and shoring up huge amounts of toxic debt, to refusing to lend altogether. The solution is to find a happy medium. I am certainly not advocating a return to irresponsible lending, but there is no doubt that the banks have a vital part to play in the solution.

With the summit now over, it remains to be seen if the pledges turn into action. These will have to be implemented by individual countries. We need our politicians to act more than we ever have, and in this, they have my full support. I feel we all owe them our support in these troubling times, and for the time being at least, to put aside our political difference while we get ourselves back on track.


  1. Let's see how many of these pledges turn into real action.

    Agree entirely about the banks. We're looking for a mortgage to buy some land and even with a generous deposit I still can't find one at less than 6% which, given the BoE rate of 0.5%, I think is daylight robbery.

  2. In a recent survey of mortgage rates, few banks were found to be passing on the benefits of lower interest rates to their customers. Instead, they were using the lower rates as a means to generate income, and maximise profits. The worst offender was Barclays via their mortgage arm Woolwich.