The week that was - the G20

Last week the leaders of the G20 agreed to a $1.1 trillion package of financial measures which could have a massive effect on the health of the worldwide economy.

The IMF will be a main beneficiary of this agreement, as its coffers swell to $750 billion. Presumably this money will not be used to help the stretched UK economy but many other countries should benefit from the IMF's help.



Tax havens were another part of the agreement, as leaders promised to come down hard on areas such as the Channel Islands and Monaco, but this may be more symbolic than anything else.

Most Monte Carlo residents will have clever accountants who are paid a lot of money to get around financial regulation, but nevertheles this sets down a positive marker and is one step in the right direction.

Nicolas Sarkozy threatened to walk out of the summit if regulation was not boosted, but even he said that the talks achieved "more than we could have hoped for". This will have been a relief for many, not least Gordon Brown, the host leader.

Confidence

The biggest thing to come out of the G20 though was the projection of confidence. President Obama called the summmit "a turning point" in pursuing economic recovery and if this kind of rhetoric inspires confidence then the meeting will have done its job.

The large sums of money are obviously important but the sight of world leaders working together could have just as big of an impact. Confidence is a key part of any economy and if people see things getting better in the future, then consumers are more likley to start spending again.

More important than this though, is confidence within the banks and it will be interesting to see if the banks do begin to loosen their hold on the purse strings. If this happens, then things could improve, but this is a big 'if'.

What must be reiterated is that it will take time for any of the measures agreed to have any impact. So in the meantime the leaders have to try and inspire confidence. The meeting on Thursday was a strong attempt at this.

Brown boosted?

In my last post I said that Brown was gambling his political future on the outcome of the G20 talks, but this was not completely accurate. It now seems clear that Brown knew what would be agreed well before Thursday's summit.

This being the case, he knew he could build up the outcome without much risk of calamity. It could well be the case that the measures will not have the desired effect of boosting the world economy, but right now Brown is in credit.

Before the summit his poll ratings were not looking good, but their decline could now begin to slow. 'Gordon the world leader' is how he would love to be seen and by hosting the apparently successful G20 he may believe that he has achieved this.

In reality Brown is not seen quite in this light, but the summit has certainly not done his image any harm. Indeed many of the British newspapers were very favourable towards Brown's involvement.

The Guardian wrote "Gordon Brown brokers massive financial aid deal for global economy", clearly putting Brown at the centre of the action. Brown's spin doctors would have been thrilled.

Of course this may not last for long, but Brown will bask in this reflective glory for as long as possible. It should be remembered that people will continue to lose their jobs and last week's meeting will soon be forgotten.

Cameron

In terms of where all of this puts the Tories, it is unclear. Obama did meet David Cameron but as an opposition leader there is not much that one can do in such situations except perhaps support the actions taken.

Cameron will not have benefitted from Brown's hosting of the G20 but his party's position has not changed all that much. Last week's events do look good for Brown, but they will not make him instantly electable.

The future

The results of the G20 summit are currently unknown in the long term, but in the short term they will certainly be positive. In times of crisis people want to see their leaders standing shoulder to shoulder.

This may only have happened for a few hours but it was an important symbol all the same. The fact remains though, time will tell if it will make any real difference to the world economy and all we can do is sit and wait.