Business Leaders Cry for Urgent Government Action at G20 Meeting

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G20 MeetingLOS CABOS, Mexico -- Top business executives are urging world leaders to show more urgency in addressing economic malaise or risk an even deeper global crisis than in 2008-2009.

CEOs and senior executives from about 350 companies, including Nestle, Zurich Insurance Group and Walmart, pushed leaders at a Group of 20 summit in Mexico to take firm measures to lift the economic gloom.

Jean-Guy Carrier, head of the International Chamber of Commerce business lobby group, said the economic uncertainty was affecting companies "in quite a dire way."

"For the people we talk to, small and medium-sized or large companies involved in trade, the instability is just scaring them," he told Reuters at the summit on Sunday.

"It's having a pretty deleterious effect on the global economy because these companies, a lot of them say we have plans for expansion and plans for investment but we put them on hold ... Replicate this thousands of times in companies across the world and it is one source of investment, growth and jobs which is not happening."

Slowing growth in China and Brazil, fiscal tightening ahead in the United States and a stalling in trade negotiations all meant the economic outlook was already tougher than it was in 2008, he said, calling for G20 countries to send a signal that they understand the severity of the situation.

The ICC gave G20 members a must-do-better score in three of four major areas in a scorecard measuring progress since the G20 became a key global policymaker in 2008, at the height of the financial crisis.

The head of the world's biggest wind turbine maker, Vestas , said although there had been no dramatic, 2008-style crash, business conditions have deteriorated since August 2011 when the United States was struggling with budget negotiations and was downgraded by Standard and Poor's.

"Last week, I spoke to some of the largest pension funds in the world, who are very interested in making infrastructure investments, but they are concerned about doing investments because of regulatory uncertainty," CEO Ditlev Engel said.

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"If people are holding back, it becomes a self-fulfilling prophecy."

Vestas itself is struggling with one aspect of U.S. budget policy: the decision to let a tax credit for renewable energy expire at the end of 2012.

The company says it may have to cut 1,600 U.S. jobs, almost half its U.S. workforce, as a result of the change, with a decision due in the third quarter. It also announced plans in January for 2,335 job cuts in Europe.

McGraw-Hill Companies chief executive Terry McGraw said a clear signal from the G20 that countries would pull together to tackle the problems, as they did in 2008 and 2009, would help reassure the business community.

"I hope that the signals from this G20 will be 'what we were doing is not working and we are going to change it'," said McGraw, whose conglomerate includes ratings agency S&P.

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Widespread Debt: This Is Only The Beginning.
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Business Leaders Cry for Urgent Government Action at G20 Meeting

With a national debt still hovering around 120% of its GDP, Greece is still far from being out of the fiscal woods. As austerity measures bite, Greece's GDP will shrink further and its debt-to-GDP ratio will rise, putting it on course for further defaults -- er, "restructurings." Nor is Greece alone. According to official figures, debt-to-GDP ratios elsewhere are similarly high.

Photo: Gerasimos, an 83-year-old Greek man, picks through a heap of rubbish to salvage useful items as the marble gate of the Roman Agora is reflected in a mirror, in the Plaka district of Athens on Monday, March 12, 2012. Greece implemented the biggest debt writedown in history on Monday, swapping the bulk of its privately-held bonds with new ones worth less than half their original value. (AP Photo/Petros Giannakouris)

Debt-to-GDP ratio: 130%

Photo: President of Iceland Ólafur Ragnar Grímsson prior to voting in a referendum in Reykjavik, Iceland, Saturday, March 6, 2010.   Icelanders voted "no" in a nationwide referendum on approving the use of $5.3 billion of taxpayers' money to repay international debts.  The "no" vote may complicate Iceland's effort to recover from a deep recession and a banking collapse. (AP Photo/Brynjar Gauti)

Debt-to-GDP ratio: 120%

Photo: A man reads a newspaper in Milan, Italy, Monday, Jan. 30, 2012. European leaders are trying to come up with ways to boost economic growth and jobs, which are being squeezed by their own governments' steep budget cuts across the continent. The 27 EU leaders meeting in Brussels are also looking for common ground on a new treaty to toughen spending rules to dig the continent out of a crippling debt crisis. (AP Photo/Luca Bruno)

Debt-to-GDP ratio: 110%

Photo: Workers seen at the Luis Onofreâ luxury shoe factory in Oliveira de Azemeis, Portugal, Friday, Feb. 24, 2012. Debt burdens are rising fastest in European countries that have enacted the most draconian austerity programs. Portugal's unemployment rate hit a record 14 percent at the end of last year and the government imposed austerity measures to slash costs: Portugal cut pensions, reduced public servants' wages and raised taxes starting in 2010. (AP Photo/Paulo Duarte)

Debt-to-GDP ratio: 105%

Photo: People walk past a beggar on a bridge in Dublin Monday Feb. 20, 2012. Bank of Ireland, the only one of Ireland's six banks to avoid nationalization, reported it returned to net profit in 2011 thanks to heavy debt restructuring in the face of continued losses from dud loans. (AP Photo/Shawn Pogatchnik)

Debt-to-GDP ratio: 102%

Photo: The shadow of Republican presidential candidate, former Massachusetts Gov. Mitt Romney, is seen on a representation of the National Debt Clock as he spoke at a town hall meeting in Kalamazoo, Mich., Friday, Feb. 24, 2012. (AP Photo/Gerald Herbert)

Debt-to-GDP ratio: 85% each

Photo: Reflected in a window, people walk in London's City financial district, Tuesday, Feb. 14, 2012. Britain's AAA credit rating was put on a "negative outlook" by ratings agency Moody's, amid fears over weaker growth prospects and potential shocks from the eurozone crisis. Britain's Chancellor George Osborne said the assessment was a vindication of the Government's tough austerity measures and "a reality check for anyone who thinks Britain can duck confronting its debts". Moody's downgraded the ratings of six countries and also put France and Austria on the same caution as the UK amid violent protests in Greece. (AP Photo/Lefteris Pitarakis)

Debt-to-GDP ratio: 82%

It makes you wonder: Who will be next in line to default? And when they do, will we call that "good news," too?

Photo: A pedestrian looks at a sign in a shop reading: ''One euro, price haircut'' in Athens on Thursday, March 8, 2012. (AP Photo/Thanassis Stavrakis)

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Carrier from the ICC said it was crucial for G20 countries to bolster the resources of the International Monetary Fund so that it can help out countries hit hardest by the crisis.

Mexican President Felipe Calderon said on Saturday it was possible extra IMF funding would exceed the $430 billion agreed on in April but Brazil, China, India, Russia and Mexico itself have not yet committed to specific sums.

"If they actually come to an agreement to ... bring the level of funding up, that's money that's talking, it's not just a promise," Carrier said. "This is why the G20 exists. No single country can deal with this by itself."
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