Finance ministers from the world's leading economies have agreed to keep anti-recession measures in place for the time being, as well as backing new controls to curb bankers' pay and bonuses, sources close to G20 talks in London said yesterday.
But European proposals for a cap on bonuses in the financial sector look set to be kicked into the long grass, after Britain and the US resisted the idea as unenforceable.
Agreement on the need to keep pumping state money into recession-hit economies for as long as it takes to return to growth came after British prime minister Gordon Brown warned finance ministers that the world's tentative recovery would be at risk if they repeated the mistakes of the 1930s and withdrew fiscal stimulus packages too soon.
Noting that less than half of the promised $5 trillion in fiscal stimulus has so far been delivered, Brown told the summit that countries should co-ordinate their "exit strategy" from recession, which must be put into action only when recovery is firmly in place.
"Everyone is happy to talk about exit strategies, but no-one is under any illusions that they are going to start soon," said one source, speaking on condition of anonymity. "There is no objection to starting on that kind of work."
There was little doubt that Anglo-American opposition has blocked the proposal for a cap on financial sector bonuses. Instead, new mechanisms will link bonuses to the success of deals. And regulators are to be given powers to insist that banks reveal the salaries of their highest earners.
It is also understood that a March 2010 deadline has been agreed to start sanctions against tax havens which refuse to comply with new transparency rules.