Here's a surprise: the leaders of the world's biggest economies emerged from their high-profile chinwag in Toronto this weekend having failed to agree anything particularly substantive in terms of co-ordinated action - instead they've basically agreed that everyone will keep doing their own thing, and crossing their fingers that it will all be ok. It’s not really surprising: it’s hard to get all those different economies to agree on compromises that may not be directly in their national self-interest. But it does make you wonder what the point of the whole thing is…
At least new UK PM David Cameron seems to have made a splash, and not just with that Putin-esque swim in the lake: he managed to get President Obama to praise last week's Budget as 'necessary and courageous'. Beforehand, all the talk had been about the split between the US and Europe - the former warning that cutting too quickly could kill the recovery, and Europe insisting on the need for ever-tighter fiscal hair-shirts. But inevitably, the final result was a fudge: that member states should work towards lower deficits, but that they were all free to cut or stimulate as their circumstances dictated. In other words: as you were.
Even the pre-summit talk about co-ordinated bank-bashing got slightly watered down. Again, no great surprise there: if you're Australia, or Canada, and your banks held up perfectly well during the financial crisis, why should you share the same punishment as the miscreants elsewhere? The final communique did suggest that the amount (and quality) of capital banks are required to hold would be 'significantly higher'. But that's still pretty vague, and they've downgraded their target of bringing in the new rules by 2012 so that it's now just an 'aim'.
That said, this could still turn out to be a significant sentence. As Robert Peston points out today, if banks are forced to increase their capital buffers massively, it's going to increase their cost of capital; this in turn is going to make it more expensive for companies to borrow money, which won't do the UK's hopes of an investment-led recovery much good. The thing is, despite all this anti-bank rhetoric, Osborne and co still need the City onside. For instance, the FT today suggests that Government is about to launch a 'charm offensive' in the City as it tries to persuade institutions to back its 'welfare to work' programme (since providers will only be paid by results, they'll need up-front capital to get their schemes off the ground).
And that's the trouble with the G20: any macro-economic policy it comes up with might not fit with a government's domestic priorities, which means they have no incentive to support it when they turn up to these talking shops. The end result is that the combined group will only ever reach agreement on things that are blatantly obvious, or clearly in everyone's interest - i.e. stuff that you don't really need to sit around and talk about, at huge cost and disruption to the host city. Which seems to rather defeat the purpose of the whole thing, you might argue.
In today's bulletin:
G20 agrees - that everyone should keep doing their own thing
Ray of light for BA as Unite postpones strike ballot
Editor's blog: A World Cup post mortem
.xxx domain to be given the green (red?) light
MT Expert's Top Ten Tips: What to ask before you start a business