Excessive government debt is the global business community's single biggest worry right now, exceeding any concern about insufficient fiscal stimulus.
That's the urgent message that 43 of the world's most influential chief executive officers delivered to G20 finance ministers and Prime Minister Stephen Harper this weekend. Most of the executives were hand-picked by their national governments to fly to Toronto on the eve of the leaders summit.
Reducing deficits is important not only because of the direct sovereign risk, but also because balanced government books are key to restoring confidence, which is important for economic growth, said Gordon Nixon, CEO of Royal Bank of Canada.
"Business leaders said, 'You can't keep doing this,' " said John Manley, head of the Canadian Council of Chief Executives.
Executives told politicians that the private sector is willing to step in and pick up much of the responsibility for future economic growth, but that it requires transparency and certainty from governments in order to do so.
"Stimulus is winding down and the private sector is going to have to come in and pick up the slack," said Hartley Richardson, CEO of Winnipeg-based James Richardson & Sons Ltd. But it will be hard to do so without clear rules of the road, Mr. Richardson and other business leaders agreed.
The leaders urged G20 finance ministers to work more closely with the business community, and told them that the villainization of corporate leaders - particularly those in the financial sector - is hampering the ability to move forward. Sixteen of the G20 finance ministers met with the business leaders on Saturday.
The corporate push for certainty about the rules of the road came in response to messages that the Canadian and South Korean finance ministers delivered to executives on Friday evening.
"It is very important, as you know, that we have a handoff - if I may put it informally - from the public sector stimulus that we have been doing in the G20 to the private sector," Canadian Finance Minister Jim Flaherty told them. "The advice we get from you is invaluable in terms of our deliberations and the deliberations of our leaders."
"We should open an era of grand co-ordination by enhancing co-operation between the government and the private sector," said South Korean Finance Minister Jeung-Hyun Yoon. "I sincerely hope the business summit can serve as a platform for public-private collaboration and the starting point of the new normal in the global economic architecture."
Executives said financial sector regulation is one of the vital areas where there's too much uncertainty.
There was widespread recognition among business delegates that enhanced rules are necessary. Banks and markets require clarity soon in areas such as the cost of capital.
But the rules must "not push the system so far so quickly that it impairs economic growth," Mr. Nixon said in an interview.
Attendees said they were surprised to learn that there was less concern than they expected about Europe's financial health, even among European business leaders.
"I'm leaving this meeting more optimistic about the global economy," Mr. Richardson said.
There was, however, significant worry about the environment in the U.S.
On the contentious issue of a bank tax, many CEOs were surprisingly accepting of the British government's decision to impose such a levy (including, according to sources, HSBC Holdings PLC chairman Stephen Green). British taxpayers were forced to bail out institutions during the crisis, and the tax might be a necessary step for Prime Minister David Cameron's administration to take to ensure voter support as it imposes the tough measures it recently announced to begin tackling its debt, CEOs suggested.
The executives were, however, staunchly opposed to a global bank tax or the creation of a fund that governments could tap in future crises. There was "zero support" for those concepts, Mr. Manley, who is also a former finance minister and deputy prime minister, said in an interview.
The group, dubbed the B20, had not intended to come up with specific recommendations for governments. The idea was for them to provide a "reality check" from the front lines of global commerce, Mr. Manley said.
But "there was a lot more consensus than I expected to see," he added.
Participants said that Mr. Harper adeptly handled the animated discussion he held with the business leaders on Saturday afternoon, and was in his element on topics related to the economy.
The business summit was conceived by the Canadian government and organized, on relatively short notice, by the Canadian Council of Chief Executives.
South Korea's government intends to also gather business leaders for a discussion prior to the November G20 summit in Seoul.
B20 members: A who's who of influential business executives
John Manley, CEO, Canadian Council of Chief Executives
Perrin Beatty, CEO, Canadian Chamber of Commerce
Hartley Richardson, CEO, James Richardson & Sons
Bill Downe, CEO, Bank of Montreal
Rick George, CEO, Suncor Energy
Pierre Beaudoin, CEO. Bombardier
Gordon Nixon, CEO, Royal Bank of Canada
China: Huang Tianwen, president, Sinosteel Corp.
Germany: Jurgen Hambrecht, chairman, BASF SE
Japan: Masayuki Oku, CEO, Sumitomo Mitsiu Banking, and chairman of the Japanese Bankers Association
Russia: Alexey Mordashov, CEO, OAO Severstal
Spain: Cesar Alierta, CEO, Compania Telefonica
UK: Andrew Witty, CEO, GlaxoSmithKline PLC