Gordon Brown’s hopes of uniting the world’s most powerful economies behind a massive new package of tax cuts and public spending increases suffered a serious blow yesterday when he failed to persuade France and Germany to back his plan to revive the world economy.
After talks at Chequers to prepare the way for next month’s G20 summit in London, Angela Merkel, the German chancellor, ruled out ordering another “fiscal stimulus” in the short term, and made it clear that if more action were to prove necessary in Germany it would be for Berlin to decide, not the G20.
Her comments were echoed by the French finance minister, Christine Lagarde, who was attending a meeting of G20 finance ministers in Horsham, West Sussex. As ministers tried to agree a way forward, Lagarde said she was optimistic the meeting could make progress, but added that nations needed to “evaluate the remedies already put in place by each of us” before ordering huge extra spending on top of that already sanctioned.
The remarks effectively killed off proposals being pushed jointly by Brown – who will chair the G20 summit on 3 April – and US president Barack Obama, whose administration believes that more co-ordinated fiscal action by the world’s biggest economies is essential to revive global demand.
Standing alongside Brown at a Downing Street press conference, Merkel said she was sure the G20 – made up of the world’s biggest industrial and developing countries, which account for 85% of the global economy – would yield “concrete results”.