Gordon Brown – 1999 Speech at the World Economic Forum at Davos

The speech made by Gordon Brown, the then Chancellor of the Exchequer, at Davos, Switzerland, on 29 January 1999.

This morning I want to suggest that economic progress in 1999 and 2000 depends on us learning the right and not the wrong lessons from Mexico 1994, Asia 1997, Russia 1998 and Brazil 1999.

In other words there should be no retreat from global markets even as world growth has halved.

There should be no retreat into protectionism even under the provocation of trade balances worsening by $20 billion.

And there should be no repeat of the inadequate risk management, less than responsible lending and inefficient allocation of capital that gave us, even in countries pursuing good policies, emerging market spreads that swung to 1700 basis points from an equally unsustainable 200 basis points in a matter of days.

Economic progress depends therefore on first an unwavering commitment to open markets and world trade liberalisation, with an early start to the new world trade organisation talks.

Second, with America and now Europe as engines of growth, continuing the coordinated approach to growth-oriented policies begun among the leading countries in October 1998.

Third, making the macroeconomic measures work, both within firms and within economies, by proper systems of risk management and supervision and regulation.

And finally, because it should never be said of the world community, as it was said of a British politician, that “he never failed to miss a change to let slip an opportunity”, seize the opportunity to press ahead with implementing the programme of international economic reform agreed last year.

I believe we are agreed on four major changes:

First, that we should implement codes of conduct on monetary, fiscal and corporate standards as an entry requirement for the international financial system, and we should do so by April, when the IMF and world bank meetings take place; And this matters not only for Asia, exposed for lack of transparency; for Brazil, seeking a credible policy; even for Nigeria now starting again; and also for Europe with monetary and fiscal policy.

Second, recognising we have a global not just national financial system, that we should have a global framework for national and international regulators, to conduct regular surveillance of our world financial system and be its early warning system, and that we should have this in place by summer;

Third, we should develop new crisis prevention mechanisms, based on rights and responsibilities, with the private sector fully involved in country investor networks; and we should make the decision in principle by the summer and have intensive discussions to reach conclusions by the end of the year. Finally there should be a new strengthening of our international institutions and that should include the new social code of conduct that sets minimum standards for tackling unemployment, ill health, poor education, a necessary means to build trust and support for economic reform.

So in a world that has seen in the last year Russia default, Indonesia undergo revolution, Japan nationalise some of its banks and Hong Kong buy public stakes in private companies, we must not be so complacent or attempt to rebuild the present in the image of the past when the challenge is to map out a new future.

That future must involve burden-sharing – America with its strong economy embracing open markets; Europe with a stable euro sustaining growth and engaging in structural reform to tackle unemployment; Japan with its critical regional role reviving growth and reforming its banking system; and all of us playing our full part by proceeding with economic reform. 1998 was a year of challenge when we decided on economic reform. 1999 must be the year of implementation.