Sarkozy warns G20 of need for growth above austerity

PARIS (AFP) ― The Group of 20 developed and developing economies must ensure growth first and avoid the risk of a fresh global recession even if budgets are tight, French President Nicolas Sarkozy said Wednesday.

Sarkozy, current head of the G20, said France wanted to see its Cannes summit in November agree “on an action plan for growth, including precise and concrete commitments by the major economies.”

At the same time, the president told a meeting of French ambassadors that it was essential to avoid sparking a fresh recession by all countries adopting austerity measures to restore their strained public finances.

“Austerity policies at a global level will be worse than bad. They will threaten the recovery and risk plunging us back into recession.

“Reducing government deficits and total debt, which is indispensible, has to be gradual and credible,” Sarkozy said.

“To create jobs, we need growth ... to reduce the deficit and debt, we need growth,” he added.

Many countries, from the world’s largest economy the United States down, have come under pressure to bring their strained public finances back into balance.

The problem is most acute in Europe, where many governments have flirted with debt default and have been forced to adopt stinging austerity measures to avoid collapse.

However, as they have slashed spending and hiked taxes, they have also depressed demand, with some seeing their economies now shrink sharply as a result.

The G20 heads of state and government meet in the southern French resort town of Cannes Nov. 3-4. Sarkozy reiterated that he hoped for reform overall of the international financial system, especially in giving a greater role to China’s currency.