2011-11-05 17:28:20
G20 leaders in Cannes have ended their summit with a plan to boost growth and
rebalance the global economy, but no detail on plans for the eurozone.
The continuing eurozone debt crisis has dominated the summit.
"We will fight to defend Europe and the euro," said French President Nicolas
Sarkozy at a closing press conference.
He said the G20 had agreed to boost the resources of the International Monetary
Fund (IMF) and would agree on specific steps by February.
The BBC's economics editor, Stephanie Flanders, said it looked as though "the
shakedown" had failed, with a lack of detail and numbers in the final G20
communique.
France could not persuade the rest of the G20 to commit hard numbers to
providing a bigger financial safety net for the eurozone, she said.
UK Prime Minister David Cameron disputed the suggestion that there had not been
the promised agreements.
"There are agreements on both the eurozone and the IMF," he said.
But he added: "The problem is not that there isn't a deal - the problem is that
not all of the details... have been put in place."
Meanwhile, Greek Prime Minister George Papandreou won a confidence vote in
parliament early on Saturday, after vowing to form a government of national
unity.
'Essential'
Start Quote
The rest of the world needs to see more progress on the European rescue plan
sketched out last week in Brussels before they commit any hard numbers
image of Stephanie Flanders Stephanie Flanders Economics editor, BBC News
Read Stephanie's blog
How might Greece leave the euro?
Mr Sarkozy said that France and Germany were in favour of a financial
transactions tax and they hoped it would be implemented in 2012.
US President Barack Obama was enthusiastic about commitments to greater
currency flexibility.
"We welcome China's determination to increase the flexibility of the renminbi,"
he said.
"This is something we've been calling for for some time and it will be a
critical step in boosting growth."
Mr Cameron said it was "essential for confidence and economic stability" that
the IMF had the resources it needed, but reaffirmed that the UK would not
contribute to any eurozone bailout.
German Chancellor Angela Merkel confirmed that no countries outside the
eurozone had offered to contribute to the bailout fund.
The leaders released a final communique, which:
Commits to move "more rapidly" towards greater exchange rate flexibility,
without specifically mentioning China
Agrees to support the IMF and give it more money if necessary
Welcomes Italy's invitation to the IMF to monitor its economic reforms
Calls on countries with strong public finances to take steps to boost domestic
demand
Welcomes the eurozone's plans to restore confidence and financial stability
Sets up a task force on youth employment
Start Quote
Resourcing the IMF is not a substitute for the eurozone dealing with its own
issues and problems
David Cameron UK Prime Minister
PM: 'No risk' to UK in IMF plan
G20 big picture: Leaders and their economic woes
The head of the IMF, Christine Lagarde, told the BBC that she had received a
"commitment" from the leaders.
"For the moment I have sufficient resources to face requests," she said.
"But if there was a crisis, if there was escalating demands, then the members
of the IMF present in the room today said, 'we'll put what it takes to make
sure you can continue to play your systemic role'."
Some stock markets took a downward turn after the summit ended. In New York,
the Dow Jones fell 0.5%, the Dax in Frankfurt closed down 2.7% and the Cac 40
in Paris dropped 2.2%.
There were also reports of the European Central Bank intervening to buy Italian
bonds after the difference between the yields of German and Italian bonds rose
to more than 4.6 percentage points.
Greek problems
The G20 leaders' hope is that increased resources will help the IMF to support
struggling eurozone economies, such as Greece.
Mr Barroso said that he hoped Greece would stay in the euro, but added that the
country would need to take on the responsibilities that come with membership.
Greek Prime Minister George Papandreou won a confidence vote in parliament by
153 votes to 145.
Christine Lagarde told the BBC's Stephanie Flanders she had received a
commitment from the G20 leaders
Mr Papandreou said the bailout deal currently on offer by the EU had to be
accepted, and it would be "historically irresponsible" to lose it.
He said immediate elections would be "catastrophic" for the deal, so proposed a
new coalition to take charge until it had been agreed.
Opposition politicians and some members of his government had called for his
resignation, following his announcement of a referendum on the austerity
measures.
The Greek finance minister said on Friday that the referendum has now been
scrapped, but the announcement of the referendum caused big market falls
earlier in the week.
Eurozone leaders have already withheld 8bn euros ($11bn; 7bn) of fresh rescue
loans to Greece and there are fears that further delays may see the government
run out of cash and default on its payments.
Italian reforms Continue reading the main story
Crisis jargon buster
Use the dropdown for easy-to-understand explanations of key financial terms:
G20
G20
The G8 plus developing countries that play an important role in the global
economy, such as China, India, Brazil and Saudi Arabia. It gained in
significance after leaders agreed how to tackle the 2008-09 financial crisis
and recession at G20 gatherings.
Glossary in full
Italy's decision to call in the IMF to make sure it implements austerity
measures is a response to the increasing pressure from eurozone leaders to
reduce its debt levels.
On Thursday, six former allies of Silvio Berlusconi wrote an open letter urging
him to resign after his government failed to agree economic reforms.
The Italian cabinet agreed a limited package of budget reforms at an emergency
meeting on Wednesday evening, but they failed to agree to issue a decree
implementing the changes, meaning that they must now go to a confidence vote in
parliament.
"Developments in Italy are a crucial test for the credibility of the
anti-crisis framework set by the European Union," said Luigi Speranza of BNP
Paribas.