Smiles as world leaders arrive for economic talks

There were diplomatic smiles all round from Gordon Brown today, as he greeted world leaders who arrived one by one to thrash out a plan to inject confidence into the ailing global economy.

The British Prime Minister greeted US President Barack Obama warmly at the ExCel Centre in east London as they faced using their freshly-cemented special relationship to win over delegates.

The pair chatted for several minutes and appeared relaxed before the world’s media.

A long line of limousines containing the other world leaders streamed through London’s Docklands amidst extremely tight security for the G20 summit.

Today’s talks were being seen as a key test of the Prime Minister’s leadership and diplomacy.

President Obama has warned that agreement at the summit was essential if the world was to avoid the mistakes which led to the Great Depression of the 1930s.

However hopes of a deal hit a last-minute stumbling block after French president Nicolas Sarkozy and German chancellor Angela Merkel warned they would not sign up unless there was tougher regulation of financial markets.

At a joint news conference yesterday, they said that it was a “red line” issue and that they would speak with “one and the same voice” in the talks today.

While there is a general belief that failure to reach an agreement would be unthinkable – sending financial markets into a tailspin – Mr Brown may have to endure some tense negotiating before he gets his deal.

Mr Sarkozy in particular has faced accusations of grandstanding for the benefit of a French domestic audience, a claim he angrily brushed aside insisting that his hard-line stance was nothing to do with “ego or temper tantrums”.

Nevertheless the French president was a pointedly late arrival at last night’s working dinner for the leaders at No 10.

But Chief Treasury Secretary Yvette Cooper today insisted that there was more of a consensus between the countries.

She told the BBC: “There’s a surprising amount of consensus, both about the need for the stronger regulation but also about action to boost our economies.

“People call it a fiscal stimulus, it’s basically governments taking action to support the economy, put more money into the economy.”

She said there was a lot of support for “cleaning up” the whole banking system.

“That means the whole shadow banking system, the way in which it’s worked and the way in which it’s caused so many problems in terms of starting the economic problems that we are facing, that means tax havens, it means looking at remuneration, at bankers’ bonuses, the way in which you have this system of short-term speculation being given such huge massive rewards in the banks that actually accelerated the problem.”

Shadow chancellor George Osborne said he hoped that an international deal on bankers’ pay would be discussed at the summit.

He told the BBC: “I think there need to be international principles, because obviously you don’t want a system where if the US or London or indeed Germany imposes certain restrictions, that the whole banking community moves off somewhere else in the world.”

Mr Osborne also called for an agreement on world trade.

He explained: “I’d love to see an agreement on world trade, the biggest thing that’s not really mentioned in many of the papers is the opportunity to get a world trade deal that would be such a huge stimulus to the world at the moment particularly when a lot of countries are turning inwards.”

He rejected suggestions that seeing Gordon Brown “taking charge” while meeting world leaders for a series of photo opportunities was frustrating.

Mr Osborne explained: “It’s not frustrating at all, it’s in our interests that this country comes out of recession quicker than it otherwise looks like doing, secondly we want global agreements on things like free trade, it will make it easier for the next British Government; and third, it’s an opportunity for the Conservatives to also meet some of the people that are in town.”