G20: probably a waste of time


I've done a few media spots lately talking about the forthcoming G20 Summit, and its possible implications for Gordon Brown and British politics. The main point I've been making is that political commentators are making too big a deal out of the summit: outside the Westminster bubble, no one is really expecting anything useful to come out of it, so its not likely to do Gordon Brown much damage even if, as most people assume, meaningful agreement proves hard to come by.

The other point is that even though I don't expect anything particularly helpful to come out of the G20, I'm sure they'll be able to cobble together enough points of agreement to make the whole jamboree look worthwhile.

Funding for the IMF is likely to be increased, and then there will be a host of populist measures to get the media's attention. I expect the G20 will agree to regulate hedge funds and private equity groups (something old Europe has wanted for ages), even though they are almost entirely un-implicated in the current crisis. They'll probably announce a pointlessly harsh crackdown on tax havens, which (again) had absolutely nothing to do with this mess, as well. And there's almost certain to be some bland declaration of the G20's commitment to free trade, accompanied by absolutely no action whatsoever.

One area where there doesn't look like being any agreement is on the co-ordinated fiscal stimulus that Brown and the Americans have been pushing for. The other EU member states are, for the most part, strongly opposed, arguing that they'll already done a fiscal stimulus and a monetary stimulus, and that these things take time to work through the system and have an effect. There's no point running up huge deficits just for the sake of it, they say. And if Gordon Brown can't convince his own finance minister, or the Governor of the Bank of England, I doubt he's going to be successful with the G20.

Quite right too: the IMF says our budget deficit is going to by the highest in the G20 by 2010, at 11 percent of GDP, so the earth is scorched enough already.