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Monday, 15 August 2011

Chancellor Tells World Leaders To 'Show Courage'

George Osborne today called on global leaders to show "courage" and work together to fend off another financial crisis and keep the recovery on track.

The Chancellor warned the "future prosperity of millions" was at stake without decisive action to tackle problems in the world economy.

He joined finance ministers from Singapore, Canada, South Africa and Australia in demanding reforms in a range of areas to go along with tough deficit-cutting measures as the head of the World Bank warned global stock markets were entering a "new danger zone".

Robert Zoellick said the response by leaders in America and Europe to economic challenges in recent weeks had led many in the markets to "lose confidence in economic leadership of some of the key countries".

That was echoed by Mr Osborne and the other finance ministers, who wrote today: "We all knew the recovery from the global financial crisis would be prolonged. However, the more serious malaise today is the lack of confidence in efforts by governments to address the structural problems that underpin weak growth, high unemployment and unsustainable fiscal balance sheets."

Calling for a "new global response", they outlined reforms of regulation, banks, closer eurozone integration and a push for trade to go alongside fiscal discipline.

In an attempt to set the agenda before major meetings in the autumn, they wrote in the Financial Times: "The biggest barriers are political, not economic, so what is needed is political leadership and courage." They added: "We have more than our credibility at stake. We have the future prosperity of millions of fellow citizens to safeguard."

The intervention follows a turbulent week on the stock markets after concerns about debt in the eurozone and the downgrading of the US economy.

French president Nicolas Sarkozy and German chancellor Angela Merkel are meeting tomorrow to try to thrash out a plan to tackle the crisis on the Continent.

It comes amid further concerns about the British economy and a Coalition row over scrapping the 50p top rate of income tax. A Chartered Institute of Personnel Development and KPMG survey of 1,000 employers found unemployment is set to rise this year.

Meanwhile senior Liberal Democrats are pushing the Government to consider a tax on the richest homeowners as a trade-off for scrapping the 50p rate of income tax.

Mr Osborne gave his strongest hint yet that the top rate will be abolished, saying it was "very uncompetitive". But scrapping it would lead to demands from the Lib-Dems for the richest to be taxed in another way - possibly through a levy on homes.

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