FRENCH PRESIDENT Nicolas Sarkozy and British prime minister Gordon Brown yesterday called for greater international resolve in tackling the recession, credit crunch and plunge in world trade as they put the need to support economic growth ahead of renewed budgetary discipline.
Speaking at a summit in Evian, on the edge of Lake Geneva, the French president and British prime minister expressed their concern that tentative hopes of a recovery could be crushed if other leading economies failed to kick-start bank lending or curb rising protectionism.
“We have to increase bank lending and both of us are worried that banks have yet to respond in full to the situation we have where industries and sectors are calling for help from the banks,” Mr Brown said.
The two leaders, who were meeting ahead of the G8 summit in Italy beginning tomorrow, did not say which of the G8 they were referring to over the need to support growth, but they are both concerned about Germany’s call for a rapid return to fiscal discipline.
Mr Sarkozy and Mr Brown said they were examining ways to try to stabilise the oil price, in the face of a recent surge that threatens to choke a recovery. “There’s got to be these discussions to understand what the demand will be in the future, what the supply will be in the future,” Mr Brown said.
They defended their expansionary fiscal policies over the coming years, saying governments had to invest to save jobs but also invest in technologies to underpin faster future expansion. “We cannot allow several years of feeble growth,” Mr Sarkozy said.
Despite their different traditional approaches to industrial policy, the British government has shown greater interest in recent months in France’s approach to nurturing technologies and businesses of the future.
Lord Mandelson, the UK business secretary also attending the summit, said Europe had to “keep managing the effects of falling demand and constrained credit while also equipping its economy for future success”.
Mr Sarkozy yesterday appointed Michel Rocard, a former socialist prime minister, and Alain Juppé, a former centre-right premier, to head a commission to identify France’s long-term industrial and technological investment priorities. The government aims to raise billions of euro through a special national bond to pay for them.
Mr Sarkozy and Mr Brown have come under fire in recent weeks for the precarious state of the public finances in their two countries.
But both have made continued government spending a top political priority, relegating fiscal retrenchment. – (Copyright The Financial Times Ltd 2009)
