G20 to focus on growth over austerity
G20 delegates meet in Moscow and agree to focus on creating jobs rather than cutting costs as unemployment rates spiral.
Jobs and growth will be the new focus of the G20 as a meeting of ministers have agreed to move away from the austerity measures championed by member states such as Germany.
The group of finance and labour leaders and bank governors from 20 major and emerging economies had been meeting in Moscow on Friday and Saturday to map out the future fiscal plan.
Hosts Russia said G20 policymakers had soft-pedalled on goals to cut government debt in favour of a focus on growth and how to exit central bank stimulus with a minimum of turmoil.
“(G20) colleagues have not made the decision to take responsibility to lower the deficits and debts by 2016,” Finance Minister Anton Siluanov said.
“Some people thought that first you need to ensure economic growth.”
Delegates pledged to make the shift from austerity cuts to growth and job market stimulation as carefully as possible to avoid derailing volatile financial markets.
“We do not see any revival of growth in Europe yet, and Japan – we’re keeping our fingers crossed,” said Indian Finance Minister Chidambaram Palaniappan.
“The best case scenario for today would be for the advanced economies to get growth going. They must keep in mind the impact of their actions on the large emerging economies.”
Escalating youth unemployment rates, which are approaching 60 percent in weaker eurozone economies such as Greece and Spain, means key G20 members, including the United States, made clear ahead of the meeting that the fight against unemployment should be at the centre of the agenda.
Other states, like Germany, are known for wanting to keep a strict eye on fiscal discipline.
A final draft of the meeting’s agreement, obtained by Reuters said an action plan to boost jobs and growth, while rebalancing global demand and debt, would be readied for a G20 leaders summit in September.
Tax clampdown
Ahead of the meeting the US Federal Reserve said it could begin cutting its quantitative easing programme, which injects $85bn into the economy via bond purchases, later this year and end the programme by mid-2014, causing panic among emerging nations.
Washington said it would be clear about its intentions, and in return managed to ensure that the text contained no binding fiscal targets.
The G20 also approved the action plan delivered earlier in the two-day meeting by the Organisation for Economic Cooperation and Development (OECD) to clamp down on tax avoidance.
“We fully endorse the ambitious and comprehensive action plan submitted at the request of the G20 by OECD aimed at addressing profit erosion and profit shifting.”
Major companies such as Starbucks and Amazon have come under criticism for avoiding paying taxes in certain countries through various legal loopholes.