David Cameron has warned of the dangers of repeating the mistakes which led to economic depression in the 1930s, as world leaders struggled to find consensus at the G20 summit in Seoul.
The Prime Minister said that one of the key factors behind the 2008 financial crisis – the build-up of massive trade imbalances between the high-consuming West and the productive economies of east Asia – had not gone away and might even, according to the IMF, be getting worse.
He accepted that the G20 was not in a “heroic phase” of the kind seen at earlier summits in London and Pittsburgh, when fear of the economic abyss made co-operation on a huge range of issues possible.
But he said it was up to the heads of major economic powers gathered in the South Korean capital to “show that this world, these politicians, these leaders, have learned the lessons of the 1930s – we’re going to keep the system open rather than see it progressively close”.
Discussions in the run-up to the summit have been dominated by anxieties over protectionism and “currency wars”.
US President Barack Obama has indicated concern that Beijing is keeping its yuan currency artificially low in order to boost its exports. But America too has sparked anger from G20 states including China and Germany for its 600 billion dollar round of quantitative easing, which some see as a bid to drive down the value of the US currency for the same reason.
Mr Obama, who arrived in Seoul at the end of a high-profile tour of Asia, made clear that he was not ready to follow countries like the UK in drawing a halt to the fiscal stimulus policies adopted during the recession to jump-start stalled economies.
“The single most important thing we can do to tackle our debt and deficits is to grow,” said the US President.
But Mr Cameron argued that the best contribution that deficit countries – like the UK or US – could make to global economic stability was bringing down their debt.
“Some countries, those with big deficits, need to deal with those deficits,” he said. “That is not against global growth, that is helping to promote global growth.”