LONDON/PARIS (Reuters) - The world’s biggest powers will put on a show of unity this weekend to cloak differences that mean new measures to tackle the worst financial crisis in living memory will be few and far between.
Finance ministers and central bankers from the G20 club of developed and emerging nations will descend on a luxury hotel in southern England on Friday to pave the way for a leaders’ summit next month on how to pull the world economy out of a slump.
So far, however, only a deal to increase resources for the International Monetary Fund to help battle the crisis looks on the cards with countries still at odds over how to regulate markets or hive off banks’ troubled assets.
Host Britain, backed by the United States, wants to get the group to commit to more stimulus to support their economies, whether through interest rate cuts or huge government handouts.
Policymakers will also discuss how to reform the financial system to address the failings of regulation that so many blame for the current crisis -- which has already felled some of the biggest banks and put millions out of work around the globe.
“We’ve got two goals in the G20,” U.S. President Barack Obama said on Wednesday during a meeting with his Treasury Secretary Tim Geithner.
“The first is to make sure there is concerted action around the globe to jumpstart the economy. The second goal is to make sure that we are moving forward on a regulatory reform agenda.”
He may get neither. Even Chancellor Alistair Darling -- who has a lot riding on the meeting -- said on Wednesday consensus might not be reached overnight.
Many continental European nations -- bristling over paying for a crisis widely blamed on the easy ride given to banks in the Anglo-Saxon world -- feel they have already done enough.
“We don’t need to make a further effort for the moment,” was the verdict of Jean-Claude Juncker, chairman of the euro zone group of finance ministers, earlier this week.
World markets, meanwhile, are still waiting for some clarity from the Obama administration on just how it intends to clear away the toxic assets that are sitting on banks’ balance sheets and stopping them lending to companies and consumers.
Geithner proposed in February setting up a public-private investment fund that would aim to take $500 billion (359.7 billion pounds) of distressed assets off banks’ books.
Many analysts say getting out of the current mess is a non-starter until that happens, but it seems clear that Washington is no closer to a resolution and may not be even in time for the April summit when Obama visits London.
Nor is there much agreement on how to proceed with new regulation, and talks on how to manage hedge funds have been slow-moving, according to officials.
Prime Minister Gordon Brown has invested a lot in the G20 process, flying around the world to rally support for more stimulus measures much as he did for debt relief when Britain had the G8 presidency in 2005.
Agreement may be harder to get this time, although there is a growing consensus for more money for the International Monetary Fund.
Many are wondering whether President Obama is engaged enough with the international agenda given the U.S. economy has problems of its own and key appointments have yet to be made.
Britain had to deny any rift with the United States earlier on Wednesday after British media had earlier reported comments from the country’s leading civil servant, Gus O‘Donnell, saying the change in U.S. administration and a failure to fill jobs in Geithner’s team had hampered preparations for the April summit.
O‘Donnell’s office said his remarks had been taken out of context and there was a strong working relationship with the Obama team.
Still, there is a feeling that without something concrete in place by the April 2 summit, markets could fall into a tailspin.
“If indeed we get anodyne committee conclusions where all substance has been taken out of them, the markets on April 3 will be something of a disaster zone,” said Foreign Office minister Mark Malloch Brown last week.
“So there is this huge challenge to deliver something effective and ambitious.”
Writing by Sumeet Desai; Editing by Ruth Pitchford