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A rift between Europe and America over the crux of the G20 summit was last night threatening Gordon Brown’s hopes for a deal to rescue the world economy.
The size of the challenge facing the British Government in bringing together world powers was emphasised in a candid admission by Britain’s most senior civil servant that it was proving “unbelievably difficult” to liaise with the Obama Administration to prepare for the meeting.
There was also growing scepticism over Mr Brown’s call for at least $200 billion for the International Monetary Fund to bail out cash-strapped nations, with no indication that China would come up with the bulk of the funds as some in No 10 hope.
A simmering row about the whole point of the G20 meeting on April 2 burst into the open when Larry Summers, chief economic adviser to President Obama, called on other countries to follow America’s lead in pumping even more money into stimulus plans to revive the world economic system.
The United States’ stimulus package of $787 billion is equivalent to about 5.5 per cent of its annual economic output, although it is spread over three years, whereas the EU has struggled to reach agreements on a sum that barely reaches 1.5 per cent of its total GDP.
Mr Summers’s plea was attacked by Jean-Claude Juncker, the Luxembourg Prime Minister, who heads the eurogroup of single currency countries. He declared: “The 16 euro-area ministers agreed that recent American appeals insisting that the Europeans make an additional budgetary effort to combat the effects of the crisis was not to our liking.”
