Brown urges global fiscal policies

Ahead of a global summit to tackle the international financial crisis, British Prime Minister Gordon Brown on Tuesday called on nations to enact coordinated fiscal stimulus packages and to seal a new deal on world trade.

Brown told reporters that the two-day meeting of leaders from 20 major economies, scheduled to begin Friday in Washington, represents “a key moment for the world economy” as banks continue to struggle, credit remains tight, unemployment rises and a global recession seems all but inevitable.

To minimize the fallout, Brown said, governments ought to shift from focusing solely on fighting inflation through interest rates and monetary policy to using public spending to boost demand and employment. He lauded the example set by China, which this week unveiled a two-year, $586-billion stimulus package that included tax cuts and investment in infrastructure projects.

Brown’s government is widely expected to propose its own tax cuts and new fiscal policies soon. But at a news conference at 10 Downing St., the prime minister’s official residence, he repeatedly emphasized the need for countries to put forward their stimulus packages in concert, to give them maximum effect in an increasingly globalized economy.

“This is a chance for the world to work together,” he said, noting that it did so last month in rolling out matching bank bailout plans in rapid succession to shore up the ailing financial sector.

Brown also urged swift approval of a new deal on world trade long under negotiation in Doha, Qatar. Only “small differences” remained to be ironed out, said Brown, who warned against a “retreat into protectionism” at such an economically sensitive moment.

That last remark might be interpreted by some observers as an indirect admonition to President-elect Barack Obama, whose commitment to free trade has been questioned. But Brown expressed confidence that Obama agreed with him on the need for a new trade pact.

Obama is not expected to participate in the economic summit.

Brown’s comments Tuesday were part of a campaign to keep Britain, and himself, out in front on the debate over international finance reform and discussions of how to keep the global economy moving.

The British leader is eager to cement his reputation as a pioneer in financial policy after 10 years as chancellor of the exchequer under his predecessor, Tony Blair. Brown was widely praised last month, and even called a savior of sorts, for devising a bank rescue plan in Britain that other countries quickly copied, with its emphasis on recapitalizing struggling financial institutions with taxpayer money.

The international plaudits have been crucial in reviving Brown’s fortunes at home. Just a few months ago, with his approval rating at a dismal 17%, political commentators had all but written him off as a failed leader who would surely lose in the next general election.

Now his performance on the world stage has put Brown’s Labor Party almost within striking distance of the Conservatives in the opinion polls again. Last weekend, Labor was able to hold on to a parliamentary seat in a closely watched special election in Scotland, in a district adjoining Brown’s.

A poll released Tuesday showed that more people trust Brown and his party than the opposition to shepherd the economy through hard times.

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henry.chu@latimes.com