G20 'to call for economy balance'

This week's G20 summit in the US will call for major reforms to promote a more balanced global economy, according to a document seen by the BBC.

A draft paper hints at significant policy changes from G20 countries, including the UK, the US and China.

And while stimulus packages should continue for now, the document called for the creation of "transparent and credible" means to unwind that support.

Leaders will meet in Pittsburgh with the economy high on the agenda.

No enforcement

The document says huge imbalances in the global economy must be ironed out.

If this does not happen, the world will "face anaemic growth" at levels that are "unacceptably low", it says.

However the paper does not suggest any mechanism for enforcing its plans - other than countries coming under pressure from the International Monetary Fund (IMF).

And while no countries are mentioned by name, BBC business correspondent Joe Lynam says the document is suggesting that rich indebted countries, such as Britain and the US, should save more while cautious and savings-oriented nations such as Germany and China increase spending.

The document is ambitious, our business correspondent adds, and is aimed at removing some of the wild economic swings that have marked the opening decade of the 21st Century.

There have long been calls for China to allow its currency, the yuan, to rise, encouraging Chinese consumers to spend more on foreign goods.

But others argue that in the longer term, China should work on improving pensions, healthcare and other policies, to reduce the incentive people have to save so much.

Stimulus withdrawal

Nations such as China need to spend more, the G20 is set to say

The document appears to back comments made by British Prime Minister Gordon Brown that there will be no early end to the international stimulus package aimed at taking the world out of recession.

But it calls on the IMF and the G20's Financial Stability Board to draw up, by November, "transparent and credible" ways of withdrawing that financial support.

The document also acknowledges that each country will have to find its own way of winding back its support in terms of the scale and timing of the pullback of support.

news.bbc.co.uk