18 Jun 2012

G20 meets – but no great hopes of progress

Just arrived in an extremely muggy, pre-dawn Mexico. World leaders will be reassured that the Greek result didn’t send markets plunging. The prime minister’s staff checked market movements as his plane flew over Texas. They’ll by now have noticed that the markets’ focus has swung back to Spain.

This G20 will be another moment to try to apply pressure to the Germans. Last year in Cannes, the US, China and IMF contributors, including the UK, tried to get Angela Merkel to commit to bigger measures, boosting bailout funds ahead of pooling debt.  David Cameron would say there was progress of a kind there. But rather like England at the Euros, expectations at this G20 are pretty low.

George Osborne told cabinet last week that his central presumption now is that the eurozone crisis will neither reach a happy nor a tragic conclusion, but will grind on for years, overshadowing the rest of this parliament and holding back the whole world’s growth. In that context, the cabinet heard, it might be more realistic if ministers didn’t talk up a “go for growth” strategy that risked underperforming badly, but instead made the central claim of the coalition a more modest “we created a safe haven” approach – “we protected the UK from the worst of the storm”.

And you get the idea that the chancellor isn’t the only one with subdued hopes for the eurozone. No-one here seems to think this summit by the foaming Pacific is going to replicate the London G20 summit of 2009 (for his supporters, the crowning achievement of Gordon Brown’s premiership), which managed to steady nerves after the banking crisis.

Any progress could be in bilaterals trying to build up to announcements at the EU summit at the end of next week. Any drama could come from elsewhere – how does President Putin cope when President Obama tries to apply pressure over Syria?  The day is young…  Actually, 4.20am here as I write.

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