FTSE becalmed as Britain backs Ireland

If the point of the G20 summit was to reassure everyone that governments were willing to work together to sort out the big structural problems in the world economy, it clearly hasn't had the desired effect: stocks plummeted around the world as the various bigwigs left Seoul without apparently coming to any major conclusions about trade, regulation and, particularly, currencies. On the plus side, with fears mounting over the future of the Irish economy, the big European powers - including non-Eurozone Britain - have promised to guarantee 100% of Ireland's debts, a move that seems to have calmed the market. Just goes to show: they can work together when they need to...

The G20 summit was theoretically a meeting of the world's biggest economies, but cynics would argue that it's basically all about the US and China. The major stumbling block continues to be currencies - the US still believes that China is keeping the yuan pegged artificially low, giving its exporters an unfair advantage, while China is unhappy about the US effectively devaluing through its massive quantitative easing programme. And the bad news was that they didn't seem to get much closer to a deal.

The ministers agreed to avoid 'competitive devaluation' and move towards 'market-determined exchange rates', but it was all a bit woolly, if truth be told. Same goes for the bit about measures to correct trade imbalances, while there was nothing much to shout about on the regulatory front either. So all in all, nothing very reassuring. And the talks have now been parked until the first half of next year, which means a solution is not particularly imminent.

The other thing spooking the markets today has been talk of a looming economic crisis in Ireland, with fears that it might default on its sovereign debt. But Britain has this morning issued a joint statement with France, Germany, Italy and Spain promising to stand behind all Ireland's debts - a bold move by David Cameron, who has thus far steered clear of any efforts to prop up the Eurozone's laggards (not unreasonably, since we're not in it).

Since Ireland's one of our biggest trading partners, that makes sense (although the PM said that being out of the euro will allow the UK to escape the worst of the contagion). But the reaction of the markets shows the value of concerted decisive action by the politicians. Let's hope the G20 do a better job of that next time around.