Brown and Merkel insist G-20 will deliver

Click to follow
The Independent Online

Gordon Brown insisted today he was confident of agreeing a recession-fighting package at next month's G20 - despite signs that he may struggle to get all countries to sign up to the prospect of further fiscal stimulus measures.

The Prime Minister sought to present a united front with his German counterpart Angela Merkel as she visited Downing Street ahead of the London Summit.

But, at a joint press conference following their meeting, the German Chancellor played down the need for any additional fiscal injections beyond those her government was already committed to.

Their talks came as Alistair Darling was pressing the finance ministers of all leading economies to make an "explicit commitment" that they are prepared to take further fiscal action if necessary.

Standing alongside Ms Merkel in Number 10, Mr Brown said today: "Of course we will review this as we look at what we do at the G20.

"But I think you will find that countries will be agreeing together about what we are going to do in future, both in fiscal and monetary policy and in the regulatory system.

"I believe that we are setting a path with the G20 where one by one we are reaching agreement on the big issues for the future."

However, Ms Merkel stressed that Germany had already committed to a fiscal stimulus worth 4.2% of GDP, putting her country in the "vanguard".

She went on to suggest any talk of further actions were premature as the current package was yet to be implemented fully.

"Nothing has actually taken effect on the ground," she said through an interpreter.

"If we want to strengthen the effect of such packages we will simply have to implement them first."

She also expressed confidence that the London Summit would achieve "concrete results", but talked in more general terms about the measures that could be taken.

"What we need to focus on at this meeting is what impetus we can give the economy," she said, referring in particular to multilateral assistance for individual countries."

Mr Brown was at pains to stress the friendly nature of their talks, which involved Ms Merkel and her husband spending last night at the Prime Minister's country retreat, Chequers.

The German Chancellor had been "subjected to" a traditional English breakfast, he joked, followed by a "long walk in the hills", when they discussed the issues facing the world.

Ms Merkel described a "very relaxed evening" at Chequers, adding that it "allowed for a very intensive debate, actually".

Her visit comes in preparation for the G20 gathering in London on April 2, as does a meeting of finance ministers and central bank governors being chaired by Mr Darling in Horsham, West Sussex today.

The Chancellor used a radio interview today to underscore the importance of the world's leading economies agreeing to provide further fiscal measures as required.

"The point of the meeting is to get a commitment that countries at this time will not hold back if it's necessary to put more money into the economy," he told BBC Radio 4's Today programme.

Berlin, along with Paris, is among several European capitals thought to be resistant to the need for a potential further fiscal stimulus.

Mr Brown appeared to strike a different tone from the Chancellor at today's press conference, emphasising the scale of the fiscal boost already entered into by every country in the world.

"Every country we know has made a major contribution to fiscal stimulus," he said. "It is the biggest the world has ever seen."

He said Britain and Germany were committed to delivering the fiscal stimulus that had already been agreed, before going on to hail their joint efforts on overhauling regulatory systems.

"We must take action to reshape the regulatory system for the new times," he said.

He and Ms Merkel were agreed on the need for such supervision to cover hedge funds in future, he said, adding that regulation would be applied according to what institutions actually did rather than what they said they did or called themselves.

He rejected suggestions that the US would not sign up to such a move, saying: "I believe the Americans are ready to support us in this change that we are going to bring about."

The Prime Minister said he and Ms Merkel had also agreed the need for international rules governing bonuses in the financial sector to prevent "irresponsible rewards" in future.

"We agreed that not only should there be national principles governing that, but international principles too."

The Tories today seized on Ms Merkel's remarks as evidence that not all countries were signed up to Mr Brown's recession-fighting strategy.

Shadow chancellor George Osborne said: "Central to Gordon Brown's attempt to draw a political dividing line with the Conservatives in the run up to the Budget, has been his claim that the whole world is signed up to yet more debt-funded fiscal stimulus.

"That plan, which he hoped the G20 summit would provide cover for, is falling apart as it becomes clear that other countries like Germany share Conservative concerns about rising debt levels.

"Hopefully this weekend Gordon Brown has learnt his lesson that he should stop trying to use the international stage to fight his domestic political battles, and instead focus on getting international agreement on banking reform and trade that really would have a stimulating effect on the world."