5th Mar 2024

Sustained recovery hangs in the balance for G20

  • G20 leaders will be hoping they can mirror Pittsburgh's remarkable turnaround (Photo: Adam Sacco)

Leaders from the Group of 20 industrialised and developing nations are meeting in the US city of Pittsburgh (24-25 September), with a plethora of topics jostling for position on the agenda.

The mood in the formerly depressed steel town is likely to be more upbeat than previous G20 meetings since the crisis began, when leaders were very much in financial fire-fighting mode.

Read and decide

Join EUobserver today

Get the EU news that really matters

Instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

This time round, attention is set to focus on the need to continue economic stimulus packages in order to turn recent signs of a return to growth - seen in Germany, France, Japan and the US – into a long-term economic recovery.

While most members insist a premature easing off on stimulus spending would threaten a double-dip plunge into greater recession, the new Japanese government recently signalled its intention to cut back on"wasteful" stimulus spending mapped out by the former administration.

Likewise constitutional requirements and the German aversion to inflation, may cause the country's leader, Angela Merkel, to start talk of easing off if re-elected this Sunday.

Debate around the Pittsburgh table will also centre on how to co-ordinate exit strategies for when recovery does finally return, with EU leaders meeting in Brussels last week stressing now is the time to begin planning.

"The whole future of Europe's welfare societies and the whole future of our competitiveness depend on how well and how fast we can implement our exit strategies," Finland's finance minister Jyrki Katainen said this week.

French President Nicolas Sarkozy told national television on Wednesday that the worst would not be behind them until unemployment levels started to fall, with the possibility that further G20 "smart stimulus" packages may be concentrated in this area.

World imbalances

The debate over how to prevent future economic imbalances – singled out by many as a key component of the economic crisis – has gained in traction in recent weeks.

Economists point out that a return to global growth should not mean a return to the huge trade differences which saw surplus countries such as China and Saudi Arabia stockpile reserves, creating a glut of cheap credit that helped US consumers move further into debt.

The EU insists it is trade neutral as a bloc, with Germany's large surplus counterbalanced by UK and Spanish deficits. This argument is unlikely to wash with the US however, with Germany seeking to push the emphasis back onto financial regulation in recent days.

But analysts say the G20 is set to agree a new architecture to prevent the future build up of greater imbalances that have started to come down over the last year.

John Kirton, director of the G20 research group in Canada, predicts Friday's statement will set out a new framework whereby countries such as China will agree to scale back on exports if they surpass an agreed threshold.

In exchange for greater voting rights within the International Monetary Fund and the chance to increase stakes in foreign companies overseas, China is set to agree mechanisms that could be used to slow exports to the rest of the world, he told EUobserver.

Possible mechanisms include allowing the value of the yuan to rise, thereby increasing the price-tag of Chinese exports.

Banks, bonuses

Following a Franco-German initiative, EU leaders agreed in Brussels last week on the need to clampdown on the banking culture of big bonuses.

Mr Sarkozy in particular has played up to public outrage in France, while the Dutch government decided to seize the moral high-ground with a unilateral action to limit bonuses just days after a meeting of G20 finance ministers in London this month called on the Financial Stability Board to come up with a solution.

The US has been reluctant to call for an out-and-out cap of executive pay, but the Federal Reserve has been raiding US bank files in recent weeks to glean information on trading positions.

While this could herald a move towards ensuring pay packages are increasingly based on long-term profits, a US / EU dog-fight in this area cannot be ruled out, with Mr Sarkozy once again threatening to walk out if he does not get what he wants.

Likewise serious debate in the area of increased capital for banks is expected, with EU banks concerned this will have a disproportionate effect on them.

The chair of the Financial Stability Board, Mario Draghi, is expected to come forward with proposals in this area.

All this pushes the important issue of climate finance further down the agenda, although an announcement in this area may be made. French talk of a carbon border tax for the EU is likely to face strong opposition from China amongst others.

EU supply chain law fails, with 14 states failing to back it

Member states failed on Wednesday to agree to the EU's long-awaited Corporate Sustainable Due Diligence Directive, after 13 EU ambassadors declared abstention and one, Sweden, expressed opposition (there was no formal vote), EUobserver has learned.

Angry farmers block Brussels again, urge fix to 'unfair' prices

Following weeks of demonstrations across Europe, farmers returned to Brussels to protest over unfair competition in prices, as EU agriculture ministers met just a few metres away to discuss a response. The police used water cannon and tear gas.

EU's €723bn Covid recovery fund saw growth, but doubts remain

The €723bn Covid-19 recovery fund, launched three years ago, has been a success, according to a mid-term internal review — but less effective than initially predicted. And according to one NGO, the commission painted an "overly positive picture".


The six-hour U-turn that saw the EU vote for austerity

The EU's own analysis has made it clear this is economic self-sabotage, and it's politically foolish three months from European elections where the far-right are predicted to increase support, writes the general secretary of the European Trade Union Confederation.


Why are the banking lobby afraid of a digital euro?

Europeans deserve a digital euro that transcends the narrow interests of the banking lobby and embodies the promise of a fairer and more competitive monetary and financial landscape.

Latest News

  1. EU must overhaul Africa trade offer to parry China, warns MEP
  2. EU watchdog faults European Commission over Libya
  3. Hungary's Ukrainian refugees in two minds as relations sour
  4. The six-hour U-turn that saw the EU vote for austerity
  5. Defence, von der Leyen, women's rights, in focus This WEEK
  6. The farming lobby vs Europe's wolves
  7. EU socialists fight battle on two fronts in election campaign
  8. EU docks €32m in funding to UN Gaza agency pending audit

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Stakeholders' Highlights

  1. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  2. UNOPSFostering health system resilience in fragile and conflict-affected countries
  3. European Citizen's InitiativeThe European Commission launches the ‘ImagineEU’ competition for secondary school students in the EU.
  4. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  5. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  6. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA

Join EUobserver

EU news that matters

Join us