Brown offers blueprint for banking reforms

British prime minister Gordon Brown will offer new British plans for tighter banking controls today as the blueprint for the rest of the world.

A day after the Turner Report on sweeping UK financial regulation reforms was unveiled in London, Brown will parade the document in Brussels at the latest in a series of summits discussing the financial crisis.

The two-day EU meeting is under pressure to deliver action and not just more summit declarations.

However, officials point out that the talks are part of the build-up to the crunch G20 international summit which Brown will host in London on April 2.

On the Brussels agenda are energy security, climate change and, most crucially, the economy.

Before the summit started, the President of the European Commission Jose Manuel Barroso warned against more rhetoric: “What our citizens need now is not words, they need action. I’ve said it before: implementation, not gesticulation.”

European trade union chief John Monks also called for European leadership to deliver answers.

Mr Brown thinks he may be able to help.

“It is the Prime Minister’s view that the Turner review that we have published for the UK provides a potential blueprint for wider reform of the global financial system,” Mr Brown’s spokesman said.

“There are a number of important principles and approaches in Turner that he will be raising with his European partners, in particular the commitment to extend the scope of regulation and oversight to all systemically important institutions, markets and instruments, including systemically important hedge funds; the adoption and enforcement by national supervisors of internationally-agreed principles of financial sector compensation and bonuses to prevent excessive risk-taking; bringing credit derivative products into the global regulatory net; and establishing supervisory colleges for all remaining cross-border financial firms by the summer.”

First Mr Brown goes to Paris for lunch with French President Nicolas Sarkozy, before going on to Brussels for a meeting likely to produce more pledges of solidarity and co-ordinated action to tackle the downturn.

The draft summit conclusions talk about agreeing to “rapidly deliver” reforms to establish responsible financial markets for the future.

They express EU leaders’ confidence on the medium-term economic outlook.

But officials in Brussels admit that a constant diet of summit declarations risks causing political indigestion.

Mr Monks, general secretary of the European Trade Union Confederation, said: “We are now facing a recession turning into a depression and things will continue to deteriorate if policymakers do not act adequately to halt this tailspin.”

He added: “We urgently need European leadership to organise a European-wide answer to the collapse of employment and economic activity. We need European leadership to provide member states with the financial means to fight the crisis and its social consequences.

“We need European leadership to stop rigid rules from continuing to inflict serious damage to our economies. We need European leadership to avoid protectionism and social dumping.”

Mr Brown will take up the protectionism theme at the summit, amid fears that governments are espousing open, markets while erecting subtle trade barriers in the form of subsidies or light-touch regulation to favour domestic companies.

Asked if Mr Brown was concerned that some countries were starting to “play dirty”, his spokesman said: “There are some signs of that.

“The prime minister’s concern is not simply about what you might call old-fashioned trade barriers being erected. It is more some of the more covert forms of protectionism that might arise.

“We are not in the business at this point of pointing the finger at individual countries, but we think it is important that we have more robust international systems in place for monitoring the actions that are being taken.”