G20 summit will not solve crisis, says Merkel

 

GERMAN CHANCELLOR Angela Merkel has said this week’s G20 summit in London will not solve the global economic crisis and that the leaders of the Group of 20 (G20) nations will have to meet again.

As British prime minister Gordon Brown continued preparations for the summit, which he has heavily endorsed, Ms Merkel characterised Thursday’s high-powered gathering as an important work-in-progress.

“We are talking about building a new global financial market architecture and we will not be able to finish this in London,” she told the Financial Times. “We will naturally not solve the economic crisis either, and we won’t solve the issue of trade. We will definitely need to meet again.”

That analysis was underlined yesterday by Australian prime minister Kevin Rudd, who told the BBC that another summit would be needed before any new package of international tax cuts and spending increases could be put in place.

Stressing that a $2 trillion (€1.5 trillion) fiscal stimulus had been agreed at the last G20 summit in Washington, Mr Rudd told the Andrew Marr Show there was never any expectation that decisions on a new package of measures would be taken this week.

“That was never the intention,” he said: “A mechanism has been established for us to reflect on what we need for the future. There will be a further summit, well in time for 2010 I assume, which will look at what numbers will be needed then.”

The assessments by Ms Merkel and Mr Rudd came at the end of a difficult week for Mr Brown, which has seen his pre-summit tour of three continents play to underwhelming domestic reviews against a backdrop of speculation about a rift between the Treasury and Number 10 over the scope for a second fiscal stimulus for the UK economy in chancellor Alistair Darling’s budget next month.

Following Mr Brown’s apparent change of emphasis, Mr Darling continued to play down expectations for this week’s summit, describing it as “part of a continuing process” and confirming that the world’s economic problems would not be “sorted in one day”.

Mr Darling insisted there was agreement among governments for a budget stimulus to support the world economy, but stressed it was important to be “realistic” about what could be achieved this week. “It is important, but it is not the end of the process. It is part of a continuing process,” he told the BBC’s Politics Show.

“It will be necessary for us, for other countries, to continue to do more. We have got to be realistic. We should not be overly optimistic that everything will get sorted in one day. It is a process. I think you will get an agreement that there does need to be a stimulus in the world’s economies, but at the end of the day it must be for individual governments to decide what they need to do in their own countries.”

With Mr Brown’s main hope possibly resting on a new agreement for regulating the global financial system, Ms Merkel welcomed US president Barack Obama’s focus on this as well as on the issue of fiscal stimulus. “I think we can achieve good results in all areas and I was glad to hear the US president make clear that he did not just want one or the other, but both,” she said.

Business secretary Lord Mandelson, meanwhile, has called for an end to bank “bashing” by politicians and the media, amid continuing fears that planned protests in the City this week could turn violent. At least 35,000 people took part in Saturday’s peaceful “Put People First” march for “jobs, justice and climate”, organised by trades unions, church groups and charities.