Brown Says World Has Yet to Feel Biggest Impact From Stimulus

Sept. 22 (Bloomberg) -- U.K. Prime Minister Gordon Brown said the global economy has yet to feel the biggest impact of government-led spending programs to stimulate demand and reiterated concerns about removing them too early.

“The stimulus that we have still got to give the world economy is greater than the stimulus we have already had,” Brown told reporters in London yesterday before his departure today for the Group of 20 meeting in Pittsburgh. “What we want to do is safeguard a recovery from a recession we feared would develop into a depression.”

Politicians in Britain are calling for the government to put the brakes on spending and to focus on curbing the budget deficit that next year will exceed 12 percent of gross domestic product, the most in the G-20.

The International Monetary Fund in April estimated that fiscal stimulus packages between 2008 and 2010 amounted to 3 percent of gross domestic product for the U.K., 3.2 percent for the U.S. and 2.9 percent for Japan.

Brown is seeking support for a formal series of meetings between world leaders to coordinate economic policies and tackle problems ranging from trade imbalances to bonus pay earned by bankers. He travels to the U.S. today and will meet leaders from the G-20 nations in Pittsburgh later this week.

Recovery View

Brown said economic recovery was not yet guaranteed, adding to comments from President Barack Obama who this week said the unemployment rate “could even get a little bit worse, over the next couple of months.”

Britain and the U.S. are proposing similar measures to get national governments to steer economic policy so that future imbalances can be unwound before they damage the system.

“By meeting at Pittsburgh, we are looking at how we can put in place for the future the mechanism or path that can lead us to either making decisions about better ways of creating growth that is sustainable in the future, a better early warning system for the world economy about potential crises, a better way of resolving difficulties or imbalances around the world,” Brown said.

He suggested that China, India and South Korea, which have had surpluses in recent years, favor his measures as much as the U.S., which joined Britain in maintaining deficits.

“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,” Brown said.

The G-20 accounts for about 85 percent of the world economy. The Pittsburgh talks will the third summit of its leaders in the past year.

Its members are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the U.S., the U.K. and the European Union.