Brown sees support for new imbalances framework

France's President Nicolas Sarkozy (L) and Prime Minister Gordon Brown attend a news conference following a working dinner at the Elysee Palace in Paris September 15, 2009.

LONDON (Reuters) - There is substantial support among the Group of 20 nations for creating a new framework to help tackle global economic imbalances and prevent future crises, Prime Minister Gordon Brown said on Tuesday.

The United States has proposed that G20 leaders meeting in Pittsburgh later this week agree a new process of consultations to help rebalance the world economy and ensure a durable recovery, according to a document obtained by Reuters.

Speaking to reporters before flying to the United States, Brown, the current chairman of the G20 club, said a new global compact was key to protecting jobs and growth.

"I have been talking to many countries in Asia, as well as in Europe, and I have been talking to President Obama and others, and I believe that there is support for that framework, that global compact, that plan for growth and jobs," he said.

The Pittsburgh summit of developed and developing nations will be the third since the leaders' group was born in November in Washington at the height of the financial crisis. The G20 met again in London in April as countries around the globe faced the worst economic recession since the Great Depression.

MAKING IT LAST

Now that many economies are recovering, albeit slowly, policymakers are looking for measures to ensure the recovery will last and prevent a repeat of the imbalances that had plagued the global economy.

"We are looking at how we can put in place for the future the mechanism or path that can lead us to making decisions about better ways of creating growth that is sustainable in the future," Brown said.

"A better early warning system for the world economy about potential crises, a better way of resolving difficulties or imbalances around the world ... this is the framework that we are talking about."

One of the big concerns is how the world economy will thrive without the help of the U.S. consumer, who most accept will no longer be able to spend at the breakneck speed that characterized the global expansion of the last decade.

The most common answer has been that countries with stronger savings cultures will have to plug the gap by refocusing on greater domestic demand.

"The world will face anaemic growth if adjustments in one part of the global economy are not matched by offsetting adjustments in other parts," the text of the U.S. proposal said.

But policymakers had long warned of the dangers of global imbalances before the crisis hit and yet remained powerless to alter the status quo.

Asked why any new framework would be better at tackling the issues than other efforts, such as the creation of International Monetary Fund multilateral surveillance measures, G7 sources said the lesson of the financial crisis had been learned -- that the world was interdependent and that joint action was more effective.

Brown has also proposed that the IMF should have the means to help countries insure against future crises and lessen the need for reserve accumulation.

"This could involve improvements to IMF facilities to make them attractive to a wider range of countries, the development and integration of regional reserve pooling arrangements, and the use by the multilateral development banks of innovative new facilities, to provide protection against sudden stops in global capital flows," he wrote last week.

(Editing by Padraic Cassidy)