Euro anxieties show up large
All G20 members urge French president to prevent another recession. Dipankar De Sarkar reports.business Updated: Sep 24, 2011 13:31 IST
British Prime Minister David Cameron and the leaders of five other Group of 20 countries issued a desperate appeal to eurozone members to sort their sovereign debt problem in a letter to French President Nicolas Sarkozy. They warned that the recession in rich countries could further slow down the economic growth in key emerging economies.
The unprecedented joint letter to Sarkozy, who is preparing to host G20 summit at Cannes in November, says that three years on from the 2008 Washington summit, “we have not yet mastered the challenges of the (financial) crisis.”
“For many advanced economies the path out of the deep and prolonged recession will be difficult. This will impact growth in emerging markets, and there is more limited room for manoeuvre than in 2009,” said Cameron and the leaders of Australia, Canada, Indonesia, Mexico and South Korea.
They also urged a “credible plan” to conclude a global trade deal but appeared to think it unlikely, saying: “If we cannot agree this we should direct our ministers to consider innovative approaches to deliver progress in a multilateral trade deal and strengthen the multilateral trading system.”
Underlying the importance of emerging economies in the current scenario, Cameron told the Canadian parliament separately, “Growth in Europe has stalled, growth in America has stalled. The effect of the Japanese earthquake, high oil and fuel prices is creating a drag on growth. We’re not quite staring down the barrel, but the pattern is clear.”
The letter puts Sarkozy in a difficult position — not only is France the current host of the G20, it is also a leading member of the eurozone group, whose 17 member-nations have been unable to agree a lasting solution to stabilise the single currency, the Euro.
The financial contagion from the sovereign debt crisis in Greece, Ireland and Portugal that began last year is now threatening to engulf the much stronger economies of Italy and Spain. Many analysts think a Greek default is only a matter of time.