RTTNews - Complacency could lead the world economy into a double-dip recession, UK Chancellor Alistair Darling warned ahead of the G-20 finance ministers' meeting in London starting Friday.
My view is that the biggest single risk to recovery is that people think the job is done, Darling said in an interview with The Independent newspaper on Wednesday.
His message was aimed at Germany and France, who are expected to seek a discussion about strategies of exit from stimulus measures at the London meeting, a preliminary to the G-20 leaders' summit in Pittsburgh on September 24 and 25.
Darling urged governments to continue spending to pave the way for a sustainable recovery.
There is a real risk that either governments or people generally think 'We have done that, we are on the path to recovery'.
Germany and France now want a coordinated exit from stimulus measures as they technically exited the recession. At the same time, the UK is still in recession. German Finance Minister Peer Steinbrueck has placed his need in a letter to G-20 finance ministers and central bank heads.
Meanwhile, France wants a coordinated crackdown on bankers' bonuses for taking excessive risks. French president Nicolas Sarkozy also wants to place caps on banks. But, Darling said it is a bit early to say How do we get out of this?
Darling agreed that there are encouraging signs that the joint action taken in the last ten months or so is having an effect. We are beginning to see the fruits of that action.
But, he said, 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.
The Chancellor wants the G-20 to take measures to fight unemployment to make sure that a recovery is sustainable. Sticking to his forecast for a 'V-shaped' recovery for the British economy, he said, I made my forecasts. I am not changing them.
In April's London G-20 summit, world leaders decided to treble International Monetary Fund's resources to $750 billion to help low-income countries to contain the crisis. Europe has agreed to provide $100 billion.
In a meeting held on Wednesday, European Union finance ministers agreed to raise its contribution to around $178 billion. In euro terms, it translates to EUR 125 billion from EUR 75 billion.
On Monday, UK pledged to give an extra $11 billion assistance in addition to $15 billion it had contributed earlier.
On Thursday, the Financial Times reported citing government insiders that Darling may make an effort to persuade the rest of Europe to meet a $75 billion shortfall in IMF financing pledges made at London's G-20 summit in April.
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