Yesterday's News

The Prime Minister deserves full marks for the sheer effort he put into the G20 summit. But . . .

The summit has not agreed anything concrete on the central danger facing the world economy. The slump into which we have now been thrown is unique. Its origin lies in the banking system which has ricocheted into what some people like to call the real economy.

Britain, let alone anywhere else, has yet to deal effectively with the toxic assets which are paralysing the banking system's willingness to lend to businesses.

There are warm words in the communiqué, but they simply mask the lack of any new concrete actions. Until this central issue is grasped, the world's economies lie in mortal danger.

We only have to go back to last weekend in this country, with the collapse of the Dumbarton building society, to realise how frail the banking system remains, despite having huge sums of tax-payers' money thrown at it.

The sense of unease is increased over a central plank of the communiqué which focuses on the new monies for the IMF. Here, unfortunately, the Prime Minister, comes with a track record.

If the last twelve years have taught us anything, it is the Prime Minster has a near-pathological weakness in recycling and recycling again monies already committed and then to present them as new initiatives.

I would expect a careful analysis of whether the "new sums" going to the IMF will show that much is already committed, or worse, they are sums that will never be paid.

Of course it is helpful to strengthen the IMF and the role it might play in protecting the prospects for developing economies. But while making sure the ambulance is more fully-equipped for a crisis has some advantages, the IMF efforts might best be seen as yet more diversionary tactics.

The summit was silent on the timetable and the agenda for the next round of trade negotiations.

Surprising, really. For making world trade easier is crucial for the developing countries.

And while it is of less interest to the US, which has a much more contained economy, it is equally vital for Germany, the great exporting power, and to a lesser extent ourselves.

Despite the hype, the G20 summit not surprisingly fails to provide any new international economic architecture.

If the world is to prosper it won't come from such high-falutin talk, but from months of hard slog negotiating that next trade round.

Date added: Friday 3rd April 2009
Latest updated: Thursday 30th April 2009