Business leaders cry for "action" at G20 meeting
LOS CABOS, Mexico |
LOS CABOS, Mexico (Reuters) - Top business executives are urging world leaders to show more urgency in addressing economic malaise or risk an even deeper global crisis than in 2008-2009.
CEOs and senior executives from about 350 companies, including Nestle, Zurich Insurance Group and Walmart Stores Inc, pushed leaders at a Group of 20 summit in Mexico to take firm measures to lift the economic gloom.
Jean-Guy Carrier, head of the International Chamber of Commerce (ICC) business lobby group, said the economic uncertainty was affecting companies "in quite a dire way".
"For the people we talk to, small and medium-sized or large companies involved in trade, the instability is just scaring them," he told Reuters at the summit on Sunday.
"It's having a pretty deleterious effect on the global economy because these companies, a lot of them say we have plans for expansion and plans for investment but we put them on hold ... Replicate this thousands of times in companies across the world and it is one source of investment, growth and jobs which is not happening."
Slowing growth in China and Brazil, fiscal tightening ahead in the United States and a stalling in trade negotiations all meant the economic outlook was already tougher than it was in 2008, he said, calling for G20 countries to send a signal that they understand the severity of the situation.
The ICC gave G20 members a must-do-better score in three of four major areas in a scorecard measuring progress since the G20 became a key global policymaker in 2008, at the height of the financial crisis.
The head of the world's biggest wind turbine maker, Vestas, said although there had been no dramatic, 2008-style crash, business conditions have deteriorated since August 2011 when the United States was struggling with budget negotiations and was downgraded by Standard and Poor's.
"Last week I spoke to some of the largest pension funds in the world, who are very interested in making infrastructure investments, but they are concerned about doing investments because of regulatory uncertainty," CEO Ditlev Engel said.
"If people are holding back, it becomes a self-fulfilling prophecy."
Vestas itself is struggling with one aspect of U.S. budget policy: the decision to let a tax credit for renewable energy expire at the end of 2012.
The company says it may have to cut 1,600 U.S. jobs, almost half its U.S. workforce, as a result of the change, with a decision due in the third quarter. It also announced plans in January for 2,335 job cuts in Europe.
McGraw-Hill Companies Inc chief executive Terry McGraw said a clear signal from the G20 that countries would pull together to tackle the problems, as they did in 2008 and 2009, would help reassure the business community.
"I hope that the signals from this G20 will be ‘what we were doing is not working and we are going to change it'," said McGraw, whose conglomerate includes ratings agency S&P.
Carrier from the ICC said it was crucial for G20 countries to bolster the resources of the International Monetary Fund so that it can help out countries hit hardest by the crisis.
Mexican President Felipe Calderon said on Saturday it was possible extra IMF funding would exceed the $430 billion agreed on in April but Brazil, China, India, Russia and Mexico itself have not yet committed to specific sums.
"If they actually come to an agreement to ... bring the level of funding up, that's money that's talking, it's not just a promise," Carrier said. "This is why the G20 exists. No single country can deal with this by itself."
(Reporting by Krista Hughes; Editing by Kieran Murray)
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