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Europe admits G20 economies will miss extra growth target

VALLETTA (Reuters) - European Union finance ministers admitted on Saturday that the world’s 20 biggest economies (G20) will miss their target of generating additional economic growth through reforms by 2018 and called for reflection on why they have failed.

Family picture during the G20 Finance Ministers and Central Bank Governors Meeting in Baden-Baden, Germany, March 17, 2017. Front row (L-R) Governor of the Bank of France Francois Villeroy de Galhau, French Finance Minister Michel Sapin, IMF Managing Director Christine Lagarde, Zhou Xiaochuan, Governor of the People's Bank of China, Chinese Finance Minister Xiao Jie, German Bundesbank President Jens Weidmann, German Finance Minister Wolfgang Schaeuble, Federico Sturzenegger, Governor of the Central Bank of Argentina, Argentina's Treasury Minister Nicolas Dujovne, Bank of Italy Governor Ignazio Visco, Italy's Finance Minister Pier Carlo Padoan and Malta's Finance Minister Edward Scicluna. Rear row (L-R) Governor of the Bank of England Mark Carney, Britain's Chancellor of the Exchequer Philip Hammond, Bank of Japan (BOJ) Governor Haruhiko Kuroda, Japan's Finance Minister Taro Aso, Adams Kone, Tunisia's Finance Minister Lamia Zribi, Federal Reserve Chair Janet Yellen, U.S. Treasury Secretary Steve Mnuchin, Rwanda's Minister for Finance and Economic Planning Claver Gatete, Brazil's Central Bank President Ilan Goldfajn, Brazil's Finance Minister Henrique Meirelles and the President of the European Central Bank (ECB) Mario Draghi.

G20 economies agreed in 2014 to boost growth in their economies by at least an additional 2 percent over 5 years through reforms, adding more than $2 trillion to the global economy and creating millions of jobs.

“It seems likely that we will not reach our 2-in-5 growth ambition by 2018,” said a terms of reference document approved by EU finance ministers for the next G20 financial leaders meeting on April 20-21 in Washington.

“We should reflect on the appropriate communication around our 2-in-5 objective and build a shared assessment and understanding of why we have not fully delivered,” said the document, obtained by Reuters.

“It is thus vital to accelerate the implementation of structural reforms and of investment in productive infrastructure,” it said.

EU delegations to G20 meeting in Washington will also reiterate that the G20 “should avoid all forms of protectionism, support the Paris agreement on climate change, the work on green finance, and the multilateral approach to taxation and to financial regulation,” the document showed.

The declaration, while standard in previous G20 meetings and communiques, has become problematic since Donald Trump became the president of the United States last year.

At a meeting in March in the German town of Baden Baden, G20 finance ministers dropped a pledge to keep global trade free and open, yielding to an increasingly protectionist United States.

Breaking a decade-long tradition of endorsing open trade, the G20 made only a token reference to trade in their communique in a clear defeat for host nation Germany, which fought the new U.S. government’s attempts to water down past commitments.

G20 finance chiefs also removed from their statement a pledge to finance the fight against climate change, an anticipated outcome after Trump called global warming a “hoax”.

Reporting By Jan Strupczewski; Editing by Ros Russell