Jeremy Warner: G20 may struggle to make progress
Thursday 01 January 2009
Outlook Gordon Brown believes April's meeting of the G20 in London will be a pivotal moment for co-ordinated action to help revive the world economy. Let's hope he's right, for the last G20, which took place in Washington last November, has already failed to live up to the hype that surrounded it as a new Bretton Woods for the 21st century.
Within days, India had broken the pledge not to engage in new protectionist measures by upping import tariffs on steel and a number of other products. The commitment to revive the Doha round by the end of the year has also plainly foundered, with America as intransigent as ever on agricultural subsidies.
The new inclusiveness is failing to match fine words with corresponding actions. Admittedly, these are early days, but the seriousness of the economic situation requires urgency. It was hard enough achieving meaningful consensus in the G7. When there are 20 sitting at the table, it may be well-nigh impossible.
Mr Brown wants the G20 to "sort out the abuses in the financial system" as well as to agree measures to restore economic growth. Both aims require the capital and trade surplus nations of Asia and the Middle East to agree obligations that stimulate domestic demand and allow their currencies to appreciate. The present mess is not all the fault of the big deficit nations. Yet it's not clear that China, whose growth story is still largely export-led, is willing to agree such a shift. I fear Brown's high hopes for next April will be disappointed.
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