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European leaders eye G20 boost

(Agencies)
Updated: 2009-02-22 21:45

BERLIN -- European leaders sought on Sunday to overhaul global financial rules and hammer out a common approach to the economic downturn at a meeting in Berlin.

German Chancellor Angela Merkel (R) speaks with British Prime Minister Gordon Brown (C) at the start of a meeting in the Chancellery in Berlin, February 22, 2009. [Agencies]

They are under pressure to deliver on pledges made at the November G20 summit in Washington, where they unveiled plans to guard against further economic meltdowns.

The G20 group of leading developed and developing nations meets again in London on April 2.

Since the last G20, recessions in Europe and the United States have deepened, forcing governments to push through huge stimulus packages that have rekindled fears of protectionism.

After near daily announcements of cash injections to prop up banks, tide over the auto sector and prevent more Americans losing their homes, US President Barack Obama is already looking at where the US economy will be after any recovery.

He is expected to unveil a plan to cut the ballooning deficit in half by 2013 with a mix of tax increases on wealthier Americans and spending cuts. Private economists project the deficit will rise to $1.5 trillion this year.

"We can't generate sustained growth without getting our deficits under control," Obama, due to host a summit on Monday on fiscal responsibility, said in his weekly radio address.

"On Thursday I'll release a budget that's sober in its assessments, honest in its accounting, and lays out in detail my strategy for investing in what we need, cutting what we don't and restoring fiscal discipline," he said.

German Chancellor Angela Merkel, hosting the leaders of Europe's big economies, is also keen to focus on long-term reforms and not see Sunday's meeting hijacked by new problems, notably worries about the fragility of some euro zone nations.

Among the ideas up for discussion in Berlin are how to ensure transparency and accountability, enhancing regulation, boosting international cooperation to supervise cross-border institutions as well as increasing IMF resources.

But ahead of the gathering, the International Monetary Fund threw its weight behind the idea of a common European bond to alleviate pressure on euro states such as Ireland and Greece that are being forced to pay hefty premiums over stronger bloc members to finance their debt.

Germany, Europe's benchmark issuer of debt, has rejected the idea.