Fears global economy is sinking as G8 leaders meet in Italy
Gordon Brown urges fellow world leaders to avoid complacency about the prospects for growth, jobs and investment amid recent downbeat data
Fears that the global economy is poised to sink back into recession after a brief spring rally took centre stage as leaders of the G8 gathered in Italy for their annual summit today.
Gordon Brown arrived in the region devastated by April’s earthquake urging fellow world leaders to avoid complacency about the prospects for growth, jobs and investment amid recent downbeat data that has dampened hopes of rapid recovery.
The G8 was due to discuss Barack Obama’s plan for a crackdown on oil speculators amid concerns that the recent increase in crude prices threatens a double-dip recession. After falling from a peak of $147 a year ago to a trough of $35 at the turn of the year, oil prices rose above $70 a barrel last month.
Although no new package of tax and spending measures will emerge from the three days of talks, leaders hope to reach agreement on measures to cap energy prices and combat rising protectionist pressures.
The prime minister, who took centre stage at the G20 summit in London, was planning to warn fellow leaders that they needed to focus on the current state of the global economy rather than plan ahead for 2011 or 2012.
Britain wants the meeting to address five key issues hindering recovery from the most serious global downturn since the 1930s – a credit famine, rising unemployment, protectionism, a lack of investment and oil prices.
Growth in the west’s leading industrial nations has collapsed since the banking crisis last autumn, with output dropping at an annual rate of 4.9% in the UK, 8.4% in Japan, 6.9% in Germany and 2.5% in the United States.
The G8 talks will draw comfort from the stabilisation of financial markets since the panic of late 2008 and from signs that the $1.1tn package agreed at the G20 has prevented a threatened meltdown in Eastern Europe.
But they remain concerned that rising unemployment – expected to peak at a record 40 million in developed countries next year – coupled with falling house prices will choke off consumer spending in the months ahead. Brown’s hopes of a major breakthrough on climate change were dealt a blow when the Chinese premier Hu Jintao was forced to fly home to deal with the ethnic riots in his home country.
Brown is hoping the summit will make progress on the agenda for the Copenhagen summit in December, which will seek to set a long and medium-term target for limiting global CO2 emissions and a package of financial aid to help developing countries adapt.
Obama’s willingness to sign up to a long-term target has improved the atmosphere for the climate change negotiations, but Brown believes that without progress this week a substantive deal in Copenhagen will be difficult to achieve.
