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PM wants global constitution for financial system

LONDON (Reuters) - Prime Minister Gordon Brown called on Friday for a world constitution to regulate the financial system and said he hoped for agreement on a range of regulation issues at G8 and G20 meetings in coming months.

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Speaking at an international conference on progressive politics, Brown also said now was not the time to put a fragile economic recovery at risk by withdrawing fiscal support, but to make 2010 a year of growth.

Brown said a global solution was required to transform financial services, which he defined as follows:

“Common rules for capital and liquidity, common standards for supervision, common rules for bonuses and a shared way of assessing the contribution banks should make to society, free of the unfair and disproportionate use of regulatory and tax havens which penalise countries doing the right things.”

Referring specifically to discussions with the International Monetary Fund and with other countries on the idea of a global levy on banks, Brown said he hoped for agreement at an upcoming G8 meeting in Canada and a G20 meeting in South Korea.

On the issue of when to start withdrawing fiscal stimulus measures to start reducing Britain’s fast-growing public deficit -- a hot political issue in the run-up to Britain’s election, which must take place by June -- Brown strongly defended his stance of delaying fiscal austerity measures.

He said the most critical objective now was to consolidate the recovery from recession, arguing that as fiscal revenues began to rise again that in itself would contribute to the much-needed reduction of the deficit.

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“This is not the time to put the recovery at risk, this is the time to make sure that growth and jobs are secured,” he said.

The opposition Conservatives, favourites to win the upcoming election, say Britain may lose its top credit rating and the pound could suffer unless more stringent action is taken to curb the deficit than Brown’s Labour party has pencilled in.

More than 60 economists warned against premature action to cut Britain’s record deficit in two letters published in the Financial Times on Friday, warning a “sharp shock” too soon could be damaging for Britain’s economy.

But last weekend a group of 20 different economists called for the government to start tackling Britain’s record deficit shortly after the election, in a letter to the Sunday Times.

Reporting by Matt Falloon and Estelle Shirbon, editing by Mike Peacock

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