G20 blow for Britain as a second summit likely
Tuesday March 31 2009
Britain's G20 ambitions were dealt another blow yesterday after it emerged that a deal on co-ordinated action to pump money into the world economy would be delayed until a second summit.
As world leaders began gathering in London, the Australian Prime Minister disclosed that negotiations over the level of a fiscal stimulus needed to prevent a worldwide depression would take place at the following G20.
This came as leaders from China, Germany and Australia lined up over the weekend to warn that they were not yet ready to agree to further tax giveaways or benefits increases, despite pressure from the US and Britain.
Fears are rising that agreement at the London summit on Thursday may focus on more easily achievable goals, such as tax havens, rather than ensuring commitment to specific goals on spending and protectionism.
Facing the biggest week of his premiership, Mr Brown yesterday strove to close down speculation about one of his most senior ministers, knowing that if he failed to do so he could be confronted with embarrassing questions about her all week.
He took the first opportunity yesterday at a press conference with the Australian prime minister to say that Home Secretary Jacqui Smith was doing a "great job". He described the issue of her having claimed for the cost of pornographic movies on her parliamentary expenses as a "personal matter" for which Ms Smith and her husband had apologised.
Fears that the summit may not result in specific agreements were raised yesterday, when Kevin Rudd, the Australian Prime Minister, told the BBC that it was "never the intention" to announce a new fiscal stimulus.
A draft G20 communique, leaked to a German news magazine, suggests that Britain wants the joint statement to herald a $2 trillion fiscal stimulus, but this figure still needs to be agreed. Downing Street said that the figure did not represent new money but the total of measures undertaken so far.
Mr Rudd said yesterday that a second summit would be needed to address the specifics.
"There will be a further summit, well in time for 2010, I assume, which will actually look at what metrics, what numbers, will be needed then."
President Lula da Silva of Brazil said last week that if the only outcome of the summit was a second summit, it would have been a failure.
Sources suggested that Mr Rudd was simply reiterating the need to monitor the impact of commitments already made.
Alistair Darling, the UK Chancellor, insisted yesterday that the UK government was never expecting world leaders to make a budget announcement at Thursday's G20 meeting.
However, the summit's loftier ambitions were contained in a document six weeks ago, 'The Road to the London Summit'.
It said that worldwide fiscal stimulus measures so far total about 2pc of output but that in recent months the IMF and others had revised down growth forecasts significantly. It added that "countries will want to monitor very closely the global impact and consider if further action may be warranted".
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- Sam Coates and Francis Elliott in London
