It is important to note that what we are seeing in the global economy is not a private-sector lead bounce back, but a modest uplift in output courtesy of unprecedented fiscal and monetary measures by central banks and governments. While demand remains so weak, such support will continue to be necessary.
On bankers' payment and regulation, the robust attitude of most European nations, however, makes more sense than our own Government's more timid stance. While the investment banking arms of several banks are turning a profit, this is in large part because extraordinary help from the authorities has driven down the cost of their capital. This assistance is necessary for the good of the wider economy, but there is no justification for investment banks paying vast bonuses to their staff while they receive this special help, especially while non-financial sectors of the economy are still suffering.

Moreover, France and Germany are right that there needs to be a elementary shift away from the reckless model of lightly-regulated high finance, which did so much to generate the crisis. And, since flows of capital and bank employees are global, there needs to be global co-ordination to deliver this.

But the most critical message finance ministers need to heed today – and world leaders later this month – is of the dangers of complacency. There are some welcome signs that the pace of economic decline is slowing, even of a bottoming out to the global downturn. But this recovery, such as it is, is fragile. We are by no means out of the woods yet. The policy response of all G20 nations needs to reflect that sobering reality.


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