TIM GEITHNER, the US treasury secretary, sounded an optimistic note on the US and global economy yesterday, suggesting a recovery was at hand and saying there was no need at the moment for another fiscal stimulus.

Speaking in London at the start of a tour of European and Gulf capitals, Mr Geithner said: “There is a very good chance for seeing the US economy and the world economy get back to the point when it is growing again over the next few quarters.”

The tone could not have been further from the irritation felt in the US administration at the perceived lack of European stimulus this spring.

The treasury secretary repeated the administration’s insistence that the stimulus policy was working and its power would intensify in the months ahead: “Policy has been very successful in arresting and mitigating the force of the storm and we’re starting to see a better basis for recovery.”

Rejecting calls from Laura Tyson, a member of the White House’s economic recovery advisory board, for a bigger stimulus, Mr Geithner said: “I don’t mean . . . we’re in a position now that you can think about more additional response.”

Instead, he focused on the $787 billion (€563 billion) programme already in place.

“Our stimulus package was designed so . . . its maximum impact takes effect in the second half of this year . . . So we’re just beginning to come to the point when you’re going to see the largest effective boost to the employment-intensive parts of the stimulus coming on stream.”

US officials are perplexed as to the reasons why unemployment in this recession has risen faster than would be expected from the loss of output so far in the downturn, while the reverse has been true in large European economies.

Underpinning the treasury secretary’s optimism has been the stabilisation of the global economy and financial markets in recent weeks alongside the reduction in catastrophic risks, which he believes represent an essential condition for a recovery.

Mr Geithner said, given the US entered recession early, it was natural that it would be one of the first countries to emerge from the downturn.

Apart from monitoring the early stages of recovery in the world economy, Mr Geithner was also canvassing support for regulatory reforms to the financial system, which will be on the table for discussion at the Group of 20 summit in Pittsburgh in September.

Mr Geithner and UK chancellor Alistair Darling said there was a broad consensus on the core issues of international co-operation on banking regulation and resolution regimes for international banks.

But neither held out hope that the summit would result in agreement on how much more capital banks would be required to hold, nor what additional penalties would apply to large or risky banks, nor how regulators would operate to tighten regulations in the next boom.

Instead, Mr Geithner said much of the onus for toughening banking regulation would come from countries acting alone: “The principal burden for these reforms will rest on what we do as individual sovereign nations at the national level.” – (Copyright The Financial Times Limited 2009)