European Union leaders called on Thursday for action to counter an economic slowdown and support industry as the worst financial crisis for 80 years sent shares plunging on fears of a deep recession.
The 27 leaders said a forthcoming international summit to reform the global financial system should take early decisions on transparency, global standards of regulation, cross-border supervision and an early warning system to restore confidence.
Having won the backing of other major economies including the United States for that meeting, EU leaders turned their attention to the likely impact of the credit crunch on their own economies.
Despite bold measures taken by Britain and the rest of Europe to rescue banks, “we are still part of a global economy that is looking at a major downturn,” British Foreign Secretary David Miliband said on Sky News.
“Outside the financial sector, the European Council (summit) underlines its determination to take the necessary steps to react to the slowdown in demand and the contraction in investment and in particular to support European industry,” the draft final statement obtained in advance by Reuters said.
Diplomats said the text was approved with only cosmetic changes.
The leaders asked the executive European Commission to make proposals on economic support measures by the end of the year.
They expressed solidarity with Iceland, particularly hard hit by a financial meltdown that threatens thousands of European savers, and urged support from the international community.
They also reaffirmed a December deadline for adopting ambitious plans to fight climate change while calling for extra work to make it “cost-effective” in light of the crisis.
Poland and Italy had pressed on Wednesday for a delay and a softening of the curbs on greenhouse gases to shield their economies from the impact.
The statement called for the first time for a coordinated system of financial supervision at EU level and the creation of a crisis cell to help manage the financial turmoil.
As a first step, German Chancellor Angela Merkel told reporters, national central bank governors will meet at least once a month to exchange information on financial supervision.
The heads of the European Central Bank, the EU presidency, the executive European Commission and the Eurogroup of 15 countries that share the euro currency will all take part in the financial crisis management cell.
Global markets continued to tumble on Thursday despite the expressed willingness of authorities around the world to take further action to support banks in trouble.
Shares in Tokyo fell by 11% on recession fears, and the Swiss authorities announced they would pump billion of francs of emergency funding into the Alpine country's two biggest banks to shore them up during the crisis.
Switzerland is an enclave inside the European Union that does most of its trade with its EU neighbors and has long been seen as a safe haven for European savers in search of anonymity.
French President Nicolas Sarkozy, chairing the summit as holder of the EU's revolving presidency, called for fundamental change in the global financial system.
“A new form of capitalism is needed, based on values which put finance at the service of business and citizens, and not vice versa,” he told fellow leaders at Wednesday's first session.
British Prime Minister Gordon Brown joined his call for a summit and urged a rebuilding of the International Monetary Fund (IMF) as the keystone of global market regulation.
Sarkozy said the meeting to review institutions such as the IMF and World Bank brought into being by the 1944 Bretton Woods conference should ideally take place in New York.
In a brief statement released in Washington, G8 partners did not go into specifics about possible reforms but said a meeting should be held “at an appropriate time in the near future.” Sarkozy said he wanted the summit to be held in November.
The G8 comprises the United States, Japan, Canada, Russia, Britain, France, Germany and Italy. Brown said he also expected key emerging nations such as China, India, Brazil and South Africa to take part.
The summit statement said the 27 EU leaders unanimously endorsed a concerted €2.2-trillion ($3 trillion) euro zone rescue plan for banks agreed in Paris on Sunday.
As jobless figures in Britain soared at a rate not seen since the slump of the early 1990s, the mood was far from triumphant as many leaders warned that hard times lay ahead. (Reuters)