(adds UK officials on bonuses quotes, Canada official)
By Sumeet Desai and Matt Falloon
LONDON, Sept 2 (Reuters) - G20 countries still think it is too early to remove the huge fiscal and monetary stimulus thrown into their economies but any exit strategies should be executed in a coordinated way, UK government sources said on Wednesday.
And Britain, hosting a weekend meeting of finance ministers and central bankers from the Group of 20 developed and emerging nations, will propose what officials called "workable" measures to curtail risky pay practices in the banking sector.
A senior UK official said second quarter data showed the world economy was stabilising after the worst crisis in decades.
"But everyone thinks it is certainly too early to declare victory ... The general feeling is that support measures need to be in place until recovery is assured," he said.
A senior Canadian finance official said on Wednesday that the stimulus may be needed through to early 2011 and a G7 source told Reuters last week that G20 policymakers would not drop their pledge to keep policy accommodative for as long as was needed when they issue their final statement on Saturday.
Nor was the language on withdrawing the economic stimulus likely to change materially and countries would still remain committed to drawing up credible exit strategies.
In Brussels, European officials said that while the worst is over for the euro zone economy, it is too early to withdraw fiscal stimuli. EU Economic and Monetary Affairs Commissioner Joaquin Almunia also noted the importance of G20 coordination. [ID:nL2567159]
The UK government source said that Britain had already sketched out a deficit reduction programme but that it was important for other countries do the same.
Removal of the stimulus would also have to be coordinated so that countries were prepared for the consequences of each other's actions and could also avoid shocking markets.
COORDINATED EXIT
For example, a separate UK government source told Reuters, countries that have bought huge stakes in their banking sector might want to exchange information on when they were selling their shares so as not to undermine investor confidence.
"Just as the immediate response to the global crisis demonstrated the need for global action, the response will continue to have to be global," the source said.
"There will have to be a lot of cooperation and exchange of information."
Asked whether coordination was possible when countries would have their own agendas to follow, the first source said that individual nations would do what was right for them but it was important that people knew what everyone was doing.
Prime Minister Gordon Brown said this week that the challenge for both the London ministerial meeting and the leaders' summit in Pittsburgh was to achieve a level of cooperation that will prove helpful next year and ensure a sustainable recovery.
Both Brown and finance minister Alistair Darling are concerned that even if the global recession is bottoming out, it may be a long slog to proper recovery because of the damage done to the financial system and U.S. consumer appetites.
"I propose we also take the opportunity to discuss how to ensure high sustainable global growth in the medium term," Darling wrote to his fellow finance ministers ahead of Friday and Saturday's meetings.
"Many countries will have to rebalance their domestic economies," the first government source said, moving away from export-led growth to greater domestic demand. But he expected little significant discussion on currencies.
BONUSES
British officials did not rule out following through on French proposals to put a cap on bonuses in the financial sector but in practice such measures are unlikely to get off the ground.
Ministers would undoubtedly discuss the issue which is likely to be the biggest headline-grabber given public anger over bankers' pay and their role in the crisis at a time when many politicians will soon be seeking re-election.
UK government sources said Darling would propose the adoption of measures that would create incentives for banks to implement more responsible pay regimes, including higher capital requirements and spreading bonuses out over several years.
Clawback provisions should also be introduced and bonuses should be largely made up of non-cash options such as shares that vest over time to "end short term rewards", one official said.
"We need to discuss taking further action on executive pay and compensation," Darling wrote to his colleagues.
"The speed and consistency of implementation on this important issue has not been sufficient to allay public concerns, and we need to ensure that we are acting to avoid excessive risk taking."
(Additional reporting by Louise Egan in Toronto and Anna Willard in Brussels; Editing by Ruth Pitchford)