G20 summit: Fractious talks resume amid debt crisis

Jose Manuel Barroso: "This crisis was not originated in Europe"

World leaders are resuming talks at the G20 summit in Mexico after a day of tense words over Europe's debt crisis.

On the second and last day of the summit, they are expected to release a statement declaring unity over efforts to create jobs and boost growth.

They have urged European action to overcome the eurozone debt crisis.

The talks are being held as talks on a coalition government in debt-ridden Greece have yet to yield an outcome and Spain's borrowing costs soared.

Rates on some Spanish government bonds were about a third higher than last month, reaching just over 5%.

The BBC's Andrew Walker says that while Europe is clearly the big danger, there are also problems elsewhere in the world's major advanced and emerging economies, starting with the two largest national economies, the US and China.

The slowdown in India is something else for the G20 to fret about at the Mexican resort of Los Cabos, our correspondent adds.

However, the Brics economies (Brazil, Russia, India, China and South Africa) pledged to increase their contributions to the IMF - the fund has been seeking to boost its finances to prevent any future financial crisis.

The five nations all offered to contribute $10bn (£6.4bn) to the IMF each in exchange for voting reforms that would give them greater influence in the organisation.

Start Quote

Frankly, we are not coming here to receive lessons”

End Quote Jose Manuel Barroso European Commission President

China also pledged $43bn (£27bn) to the IMF's crisis intervention fund, which has almost doubled to $456bn (£366bn).

'Lack of progress'

Officials at the summit are putting the finishing touches to the final statement.

A draft seen by the Associated Press news agency says eurozone G20 members have pledged to "take all necessary policy measures to safeguard the integrity and stability of the area".

Correspondents say there is a focus on job creation including through government spending as opposed to budget cuts and austerity.

If growth weakens, the proposed document says, countries without heavy debts should "stand ready to co-ordinate and implement discretionary fiscal actions to support domestic demand".

On Monday, many world leaders expressed alarm in Los Cabos at what they saw as a lack of progress in dealing with the eurozone crisis.

Start Quote

Europe is trapped. It understands that an entirely different eurozone and European Union may be needed to save its currency but it shies away from a 'big leap'”

End Quote

World Bank chief Robert Zoellick said: "We are waiting for Europe to tell us what it's going to do."

Meanwhile, Jose Angel Gurria, the Mexican head of the Organisation for Economic Co-operation and Development (OECD), said the crisis was "the single biggest risk for the world economy".

But European Commission head Jose Manuel Barroso mounted a strong defence of the EU's handling of the crisis so far.

Asked by a Canadian journalist to explain why North Americans should "risk their assets to help Europe", he replied: "Frankly, we are not here to receive lessons in terms of democracy or in terms of how to handle the economy. This crisis was not originated in Europe."

Merkel rejects bailout change

Sunday's victory of a pro-bailout party in the Greek election did not give stock markets the expected boost.

Start Quote

There's not much room for complacency”

End Quote

Antonis Samaras, the leader of the New Democracy party, which narrowly won the poll, is holding urgent talks to form a coalition with the socialist Pasok party and possibly the smaller Democratic Left party.

Mr Samaras earlier reiterated that he would "have to make some necessary amendments" to the terms of the bailout agreement reached with the European Union and International Monetary Fund (IMF), "in order to relieve the people of crippling unemployment and huge hardships".

But German Chancellor Angela Merkel appeared to dismiss the idea.

"The new Greek government has to implement the commitments entered into by the country. The programme framework has to be kept," she said.

G20: How their economies are faring

Country Growth (% GDP change, 2010-11) Unemployment (% 2011) External debt (% GDP, end of 2011)

Source: Principal Global Indicators

Argentina flag

Argentina

8.9

7.5

7.6

Australia flag

Australia

2.2

5.1

86.6

Brazil flag

Brazil

2.7

6

17.2

Canada flag

Canada

2.4

7.5

70.2

China flag

China - mainland

n/a

4.1

n/a

EU flag

European Union*

1.5

10.1**

120.0

French flag

France

1.7

9.3

191.2

Germany flag

Germany

3

6.5

159.4

India flag

India

6.9

n/a

17.2***

Indonesia flag

Indonesia

6.5

6.6

26.5

Italy flag

Italy

0.4

8.4

115.1

Japan flag

Japan

-0.7

4.6

52

Mexico flag

Mexico

3.9

5.2

26.1

Russia flag

Russia

4.3

6.6

27.7

Saudi Arabia flag

Saudi Arabia

6.8

n/a

n/a

South Africa flag

South Africa

3.3

24.9

29.4

South Korea flag

South Korea

3.6

3.4

34.9

Turkey flag

Turkey

8.5

9.8

42.7

UK flag

UK

0.9

8.1

421.9

US flag

US

1.7

9.0

98.2

* Euro area only, ** 2010 figs, *** Q3 2011. Note: External debt refers to debt owed to creditors outside the country. Countries with active financial sectors, such as the UK, tend to have large amounts of external debt.

More on This Story

Global Economy

More Business stories

RSS

Features

  • Shinji Mikamo's father's watchTime peace

    The story of the watch that survived Hiroshima


  • A man hangs a Catalan flag at his balcony near Barcelona in 2013Caledonia homage

    Who are the Europeans with an eye on the Scottish referendum?


  • Elephant Diaries - BBCGoing wild

    Wildlife film-makers reveal the tricks of the trade


  • Hamas rally in the West Bank village of Yatta, 2006Hamas hopes

    Why the Palestinian group won't back down yet


  • A woman dining aloneTable for one

    The restaurants that love solo diners


BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.