Summit's up

This week's meeting of the G20 in Canning Town provides Gordon Brown with the opportunity to repair his battered reputation and the financial system

The London Summit, in Canning Town, on April 2, could be a watershed moment. Bizarrely dubbed the ‘Obama Show’ for no other reason than the fact that it is the new president’s first European outing, the summit’s big moment will not centre on anti-capitalists or Obama – but a Take That moment: a star studded re-union led by Gordon Brown.

The world’s leaders from the G20 countries – representing 85 percent of the world’s economic output – will meet against the backdrop of the worst international banking crisis in living memory. With confidence in banks shattered, major institutions collapsed countries in recession, trade falling and rising unemployment, the measures required to restore global economic growth are unprecedented.

The summit’s delegates must agree first to take whatever action is necessary to further stabilise the markets and industrial output. There will be much talk about banking reform and the need to restore confidence and trust. But the ‘Take That moment’ will occur when the G20 players announce they are to attempt a reunion - forging a ‘global deal’ where every partner has a crucial role and benefits financially.

Many will resist the urge to get too optimistic. Friday’s summit is held on the same day as the US government releases monthly employment data. The news is almost certain to be grim, with America officially in the worst recession since the Great Depression. Millions of jobs have vanished in the past two years. The US economy shrank in the fourth quarter at its fastest pace since 1982, with plummeting demand for goods world wide.

Meanwhile other countries such as Japan and Europe have problems of their own. Japanese exports fell by a record 49 percent in February, and imports into the world’s second largest economy fell for four consecutive months. Imports from America fell a record 36 percent.


Car exports to the US have fallen for 18 months in a row, while exports to China fell 40 percent.

Europe’s problems were highlighted when the IMF estimated the 16 euro-using nations could see their combined economy fall more than three percent this year, greater than previously expected.

The European Commission’s attempts to double a credit line for struggling non-EU members to €50bn highlights further why interest rates are expected to be cut again.

And the upside? The summit’ leaders will align themselves with a timetable for economic recovery, with much pointing towards the first promising signs evident from America.   
 
Global stock markets were rising by the end of March over anticipation for the summit’s impact on confidence. Wall Street has rallied more than 20 percent from lows during the first half of the month.

Strong economic reports are showing signs of recovery in the beleaguered American manufacturing and housing sectors, with Obama expected to detail new measures as part of the ‘global deal’. But this is no ‘Obama Show’, even though every great reunion needs a great leader. Host Gordon Brown will do his level best to take control of what he hopes will be a watershed event - restoring his credibility first - economic recovery second.