In a classic show of eve-of-summit brinkmanship, Angela Merkel and Nicolas Sarkozy joined forces to give warning that they would refuse to sign any [...]]]> France and Germany delivered a late threat to derail Gordon ditherer Brown’s efforts to secure a global recovery deal last night by demanding new concessions from the United States on financial regulation.

In a classic show of eve-of-summit brinkmanship, Angela Merkel and Nicolas Sarkozy joined forces to give warning that they would refuse to sign any agreement that did not meet their “red lines” on tax havens, hedge fund regulation, tracing “securitised” assets sold around the world and capping bankers’ remuneration.

They also wanted the “naming and shaming” of tax havens that refused to go along with tougher regulatory rules, which is being opposed by the United States.

In a reminder of former confrontations between America and the countries of Old Europe, Mr Sarkozy suggested that Europe would not take economic direction from the US. He appeared to suggest that America would have to compromise, adding pointedly: “The crisis didn’t spontaneously erupt in Europe, did it?”

The firm stance of Mr Sarkozy and Ms Merkel and the language used in a joint press conference took negotiators by surprise as they prepared to work through the night on the communiqué to be released today.

Although Mr Brown and President Obama appeared confident of an agreement throughout yesterday’s talks in London, it was clear last night that Mr Obama would have to make more concessions if differences were to be smoothed over.

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Yesterday we saw unemployment levels rise to 8.6% as the powerhouse of Europe comes under real pressure- this will heighten the cause for more action from the ECB tomorrow.

Today, news from [...]]]> German retail sales for February have fallen 0.2% against the consensus of a rise of 0.2% this morning reinforcing the weak sentiment in Germany.

Yesterday we saw unemployment levels rise to 8.6% as the powerhouse of Europe comes under real pressure- this will heighten the cause for more action from the ECB tomorrow.

Today, news from G20 participants will dominate although there is a raft of data from the US later the most interesting of which will be the ISM survey. The question that needs to be answered is, does a scenario of very easy monetary conditions translate quickly into an improvement in underlying confidence.

I think that given what has gone before, this will not readily happen and that this type of statistic will disappoint for some time to come.

Overnight, the Japanese Tankan was released. The results were mixed but one has say, erred on the weaker side. Business sentiment for both manufacturing and non-manufacturing companies were marginally worse with large and small enterprises both anticipating conditions to deteriorate further during the coming 12-months. the Nikkei remained buoyed however by yesterday’s announcement of additional stimulus measures to be pushed through.

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The US and Britain have both backed away from spending proposals worth 2pc of global GDP, accepting that each country [...]]]> Gordon Brown’s plans for a $2 trillion (£1.4 trillion) “New Deal” to revive the global economy have been quietly dropped to preserve the facade of unity as world leaders gather in London for the G20 summit.

The US and Britain have both backed away from spending proposals worth 2pc of global GDP, accepting that each country must find its own way. White House officials confess that there is no chance of a deal that entails further public debt.

“Nobody is coming to London to commit to do more right now. No single number is sacrosanct,” said Michael Froman, the US deputy national security advisor.

British Foreign Secretary David Miliband disowned a leaked draft retaining talk of a $2 trillion boost, insisting that it was an old document that merely lists spending packages already under way across the world. “This G20 summit was never about writing national budgets. Let us not hear that somehow the Anglo-Saxons are for fiscal policy and the other Europeans are somehow for regulation – you have got to do both,” he said.

The text reiterates the traditional pieties, calling for an “an open world economy based on market principles” and a determined effort to “resist protectionism”. It comes as the World Trade Organisation predicts a 9pc fall in global shipments this year following a violent plunge in the last quarter of 2008.

The pledge to uphold free trade has already been cast into doubt by China, which announced a raft of export tax rebates on Friday to shore up exports.

The protectionist move is likely to irk Washington. There is grumbling on Capitol Hill that the US stimulus is leaking out to surplus states in east Asia and northern Europe which seem to be counting on American demand to rescue the world again.

But the two sides are so far apart in their diagnosis of this crisis that no real agreement seems possible. German Chancellor Angela Merkel said over the weekend that the “German economy is very reliant on exports, and this is not something you can change in two years. It is not something we even want to change”.

Czech premier Mirek Topolanek, holder of the EU presidency, attacked the US fiscal plan last week as the “road to Hell”. Europe’s leaders insist the region is already doing enough since generous unemployment payments – starting at 80pc of earnings in Germany – act as an automatic stabiliser.

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The incompetent Prime Minister has been forced to lower expectations for the G20 summit, where leaders of the richest 20 countries will gather.

Mr [...]]]> Gordon ditherer Brown’s hopes of leading the world out of recession at next month’s pivotal summit in London were undermined yesterday when European leaders flatly rejected calls for a further massive stimulus package.

The incompetent Prime Minister has been forced to lower expectations for the G20 summit, where leaders of the richest 20 countries will gather.

Mr Brown has stopped comparing his event on April 2 to the Bretton Woods meeting in 1944 which set up the postwar world financial system. He recognises that there is no appetite to create new global institutions in the face of reservations in the European Union and the US.

The London meeting risks being overshadowed by a dispute between Europe and the US over public spending. A series of leaders at an EU summit led by Angela Merkel, the Germany Chancellor, refused yesterday to go along with American calls for greater borrowing and spending by Europe.

Amid scaled-down ambitions for the G20 Mr Brown is backing a doubling of resources for the International Monetary Fund (IMF), the lender of last resort to bankrupt governments that Bretton Woods set up. He will push for its reform to involve China and other big developing economies further.

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The main interest was the pledge to double the amount of resources of the IMF, this essentially comforted the markets and encouraged risk appetite.

For the week ahead, the main highlight will be the US interest rate decision on Wednesday [...]]]> There was actually very little focus at the G20 on the forex markets and recent volatility.

The main interest was the pledge to double the amount of resources of the IMF, this essentially comforted the markets and encouraged risk appetite.

For the week ahead, the main highlight will be the US interest rate decision on Wednesday evening. The FOMC will not shift interest rates any further but in the light of recent initiatives from the UK and Switzerland, they could discuss other measures to help the economy.

The Rightmove Housing survey released overnight also came in slightly positive with a 0.9% month on month gain. With the Swiss and possibly other economies looking to adopt Quantitative Easing it may be perceived that the UK is ahead of the game.

Still early days and recent news that 10 jobseekers are applying for every vacancy signifies a mountain to climb before the UK economy recovers.

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Barack Obama didn’t show, there was no mention of further co-ordinated monetary easing and no agreement on the wisdom of a large global fiscal stimulus. Only an agreement to lay out a work plan, to be finalised before the next get-together in April next [...]]]> The results from the G20 meeting are at first sight disappointing.

Barack Obama didn’t show, there was no mention of further co-ordinated monetary easing and no agreement on the wisdom of a large global fiscal stimulus. Only an agreement to lay out a work plan, to be finalised before the next get-together in April next year, to strengthen the oversight and regulation of Financial Institutions.

Although this is an important exercise to convince people that Governments will now allow this type of mess to reoccur, the very nature of the proposed plan must be flawed. It is very unlikely that the €˜next crisis will be of the same type as the current one yet regulation will only be introduced that tackles the current crisis.

I still think that further monetary easing had been discussed pre-Washington and that we are likely to see moves in interest rates this month. The next official rate meeting is in Japan on Friday but with their rates already at 0.3%, no change is expected.

Talking of Japan, they are the latest sovereign state to admit slipping into recession following the declaration of the 2nd consecutive negative GDP figure. No surprises here and little reaction on the exchanges.

The Bank of France have followed the trend, predicting that 4th Qtr French GDP will come in at -0.5%. In fact, global data on growth, consumer demand and inflation has recently become very predictable and effects on markets minimal.

The next big reaction will undoubtedly come from positive news from one of the major economies€“ only not just yet. This leads nicely onto pontificating whether Sterling has fallen enough against the Euro especially to enable the UK’s potentially massive trading advantage to have an effect on manufacturing and exports and hence the value of the Pound.

Over the months to come, more and more pundits are going to be trying to pick the base of the exchange rate and eventually someone will be right. These levels do look fantastically cheap and assuming that Gordon Brown and Alistair Darling have got their sums right and also correctly predicted the mood of the country then lower rates could be seriously viewed as a plus point for Sterling.

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