On the surface it is all very cordial but the world’s economic powers are struggling to agree a response to the worst downturn in decades.
G20 finance ministers and central bankers are meeting in southern England to pave the way for next month’s summit on the economic crisis. The problem is that the US and Europe are at odds on how to tackle the recession. Despite this, French Finance Minister Christine Lagarde is optimistic on the chances of finding a compromise on what she calls the four pillars – regulation, rescuing the banks, stimulating the economy and world government. Paris and Berlin want to focus on tighter financial regulations. But, while Washington backs this, it is principally pushing for governments to spend more. “I think there are a couple of broad principles that we would like to see emerging out of the G20,” Barack Obama told business leaders in Washington. The number one principle outlined by the US President was “that the stimulus efforts of all countries are sufficiently robust to deal with the decline in demand.” G20 leaders are also expected to support an increase in funding for the IMF. But Brazil, Russia, India and China are not prepared to contribute extra cash unless their voting power at the finance agency rises in return. Against this turbulent background, Germany’s Chancellor Angela Merkel has arrived in Britain for talks today with Prime Minister Gordon Brown. He faces the tough task of chairing the summit of world leaders on April 2 in London.