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Britain plays down talk of a G20 rift

BRITAIN and the United States will not push G20 leaders to announce specific spending pledges to help fix the worst economic crisis in decades when they meet in London this week, British Foreign Secretary David Miliband said yesterday.

He played down talk of a deep rift between countries that support further stimulus, such as Britain and the United States, and those that have urged caution, including Germany and France.

Countries will not be asked to reveal their public spending plans at the summit, but they should realize that boosting demand will play a key role in any recovery, he said.

"This G20 summit was never about writing national budgets. It is about the international financial architecture. Let us not hear this, that somehow the Anglo-Saxons are for fiscal policy and the other Europeans are somehow for regulation. You have got to do both," Miliband said.

"You have got to mend the banking system, but you have also got to make sure that demand is put back into the economy," he added.

Leaders from the world's 20 biggest economies meet in the British capital on Thursday to discuss how better regulation, help for international trade and extra spending could help pull the world out of recession.

Earlier this month, a meeting of G20 finance ministers to pave the way for the London summit was dominated by reports of divisions between Washington and European countries over the balance between extra spending and tighter regulation.

A leaked copy of a draft G20 communique that suggested Britain was pushing for G20 nations to back US$2 trillion in stimulus measures was out of date, Miliband said.

"That was actually a previous draft of the declaration," he said, adding that the US$2 trillion figure had already been achieved if you added up all the global stimulus packages.

White House officials said on Saturday that US President Barack Obama would stress the need for "significant stimulus" to boost the world economy, although he will not demand extra spending at once.

Australian Prime Minister Kevin Rudd said there had been "real, measurable progress" between the G20 nations on fiscal stimulus, as well dealing with toxic assets, protectionism and help for the IMF. "There is a great and I think disproportionate emphasis about disagreements at the margins, when in fact much has concretely been achieved," he said.

China's Ambassador to Britain Fu Ying said China was ready to spend more to boost the economy but it had limited resources.

"We are running the largest fiscal deficit that we have seen in 20 years," she said. "People should remember that China is still a developing country."

Aside from stimulus measures, Miliband said the focus of the London summit would be on extra money for the IMF and World Bank, financial sector reform, macro-economic coordination and free trade.


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