Prime Minister Gordon Brown will today set out a five-point plan to create a “stronger and more just” world order in the wake of the worst financial crisis since the Great Depression.
By Nick Allen 10:44AM GMT 10 Nov 2008
Mr Brown wants agreement on a world trade deal and reform of the international financial system
Mr Brown will call on fellow world leaders to use the current worldwide economic downturn as an opportunity to thoroughly reform international financial institutions and create a new “truly global society” with Britain, the US and Europe providing leadership.
His call comes ahead of an emergency summit of world leaders and finance ministers from 20 major countries, the G20, in Washington next weekend.
Mr Brown will say that the Washington meeting must establish a consensus on a new Bretton Woods-style framework for the international financial system, featuring a reformed International Monetary Fund which will act as a global early-warning system for financial problems.
The original Bretton Woods agreements, signed in Bretton Woods, New Hampshire in 1944, established post-war international monetary protocols governing trade, banking and other financial relations among nations, including fixed exchange rates and the IMF.
Mr Brown’s plan for strengthening the global economy 60 years later involves recapitalisation of banks to permit the resumption of normal lending to households and businesses, better international co-ordination of fiscal and monetary policy and a new IMF fund to help struggling economies and stop financial problems spreading between nations.
He also wants agreement on a world trade deal and reform of the international financial system based on principles of “transparency, integrity, responsibility, sound banking practice and global governance with co-ordination across borders”.
As Britain moves into a painful recession Mr Brown has staked his own leadership on helping to find a way out of the global crisis.
In a speech to City financiers at the annual Lord Mayor’s banquet in London he will say: “The British Government will begin to begin a new Bretton Woods with a new IMF that offers, by its surveillance of every economy, an early warning system and a crisis prevention mechanism for the whole world.
“The alliance between Britain and the US, and more broadly between Europe and the US, can and must provide leadership, not in order to make the rules ourselves, but to lead the global effort to build a stronger and more just international order.
“My message is that we must be internationalist not protectionist, interventionist not neutral, progressive not reactive and forward-looking not frozen by events. We can seize the moment and in doing so build a truly global society.”
Mr Brown has already discussed IMF reforms with French President Nicolas Sarkozy and German Chancellor Angela Merkel and has called on countries including China and the oil-rich Gulf states to fund the bulk of an increase in the IMF’s bailout pot.
The Prime Minister wants the markets to be subjected to morality and ordinary people’s interests are put first.
He believes that in electing Barack Obama, US voters have showed their belief in a “progressive” agenda of government intervention to help families and businesses through the current crisis.
He will say: “Uniquely in this global age, it is now in our power to come together so that 2008 is remembered not just for the failure of a financial crash that engulfed the world but for the resilience and optimism with which we faced the storm, endured it and prevailed.”
However, the head of the IMF played down expectations of a new Bretton Woods system ahead of the G20 summit.
Dominique Strauss-Kahn, the IMF’s managing director, said: “Expectations should not be oversold. Things are not going to change overnight. Bretton Woods took two years to prepare. A lot of people are talking about Bretton Woods II. The words sound nice but we are not going to create a new international treaty.”
The European Union has called for an overhaul of the IMF with French President Nicolas Sarkozy, whose country holds the EU’s rotating presidency, saying: “We want to change the rules of the game”.
The US, however, has been more lukewarm on the possibility of radical change.