G20 pledge to support economy until recovery firms

By Jan Strupczewski

ST ANDREWS, Scotland (Reuters) - Group of 20 finance ministers and central bankers pledged on Saturday to prepare strategies to end emergency support for their economies, but to keep the aid flowing until recovery was assured.

The world's biggest economies -- the European Union, the United States and Japan -- are either expected to or already have emerged from recession in the third quarter.

This has prompted a discussion on when to start cutting back on the trillions in public support pledged to cushion the worst economic downturn since World War Two to maintain credibility of fiscal policies with markets and consumers.

Officials from the world's 20 biggest developed and emerging economies said at the end of talks in the small Scottish town of St. Andrews that while the economy has improved, recovery was still uneven and depended on policy support.

"While we will continue to provide support for the economy until the recovery is secured, we also commit to develop further strategies for managing the withdrawal from our extraordinary macroeconomic and financial support measures," they said.

But some central banks like the European Central Bank have already taken their first steps towards the exit from crisis liquidity support and ECB President Jean-Claude Trichet said on Saturday the U.S. Federal Reserve had similar plans.

"We had an occasion to tell what was our understanding of the progressive phasing-out of the non-conventional measures that have been decided on both sides of the Atlantic, but also by other central banks," Trichet told a news conference.

"It appears also that on the other side of the Atlantic the same kind of progressive, gradual phasing out of non- conventional measures is envisaged," he said.