The G20 summit in Brisbane has ended with world leaders committing to open up their economies to generate extra growth of more than 2 per cent by 2018, papering over splits between the US and Europe on strategy.
Leaders of the world’s 20 leading economies came up with a total of more than 800 reform commitments.
These range from completing a United State-European Union trade deal to increasing competition, boosting skills and a new push on infrastructure investment.
But Washington wants Europe – especially Germany – to act more swiftly to boost demand to avoid what Jack Lew, US treasury secretary, has described as the risk of a "lost decade" in Europe.
US officials are sceptical of German plans for an additional €10 billion of public investment over three years – representing about just 0.1 per cent of gross domestic product – saying Berlin should also use fiscal policy to stimulate growth.
Euro zone slowdown
Although tensions between the US and Europe did not boil over at the two-day meeting in Brisbane, Washington remains fearful that the slowdown in the euro zone is dragging down the global economy.
The G20 summit’s central conclusion was that the global economy is fragile and that far-reaching structural reforms are needed at a time when the room for manoeuvre on fiscal and monetary policy is limited.
The summiteers agreed to an array of reforms intended to raise the G20s overall growth by an extra 2.1 per cent by 2018 but such meetings are marked by grandiose promises that are seldom met.
The commitments include labour market reforms.
These included measures to get more women into the workforce and removing barriers to competition in product markets.
Australian prime minister Tony Abbott said that a new "infrastructure hub" would help boost investment – the Sydney-based agency would identify sources of finance and exchange best practices on developing big schemes.
In an attempt to give the G20 process some credibility, the summit agreed on a new regime, run by the International Monetary Fund and the OECD, to hold countries to account if they do not deliver.
Angel Gurría, secretary-general of the OECD, told the summit that the global economy was “stuck in the repair shop”, adding: “With fiscal and monetary policy room very limited, structural reforms are the only way forward.”
Transatlantic trade deal
Yesterday, US president
Barack Obama
met various European leaders to recommit to completing an ambitious transatlantic trade deal between the US and the EU, amid clear signs that such negotiations are stalling.
The G20 communiqué rejects protectionism and introduces a new promise that members will avoid manipulating their currencies to gain competitive advantage. – (Copyright The Financial Times Limited 2014)
