G20 Leaders Discuss Global Financial Crisis as Economies Recover

By: Lloyds_TSB

G20 leaders will gather in Pittsburgh today to assess their efforts to ease the impact of the global financial crisis and to consider next steps. There is no doubt that both the financial markets and global economy are on a sounder footing since the previous meeting in London five months ago, bolstered, in part, by the co-ordinated response agreed at that summit.

This explains why the agenda this time is more wide-ranging, covering areas including the macroeconomic stimulus, regulation, development and climate change. With the immediate danger averted, we expect the main message to be that complacency should be avoided at all costs – arguing for stimulus policies to remain in place until recovery is more assured. However, the need to consider the design and scope of eventual ‘exit strategies’ should also feature. On financial regulation and supervision, the committee is not expected to signal any sweeping changes, with more details likely to surface at the finance ministers meeting in November.

Overnight, the decision by the Fed to leave interest rates on hold is still being digested by markets. This morning, confirming the positive tone of last week’s ZEW survey and yesterday’s ‘flash’ PMIs, the September German IFO business survey is forecast to edge higher to 91.5 from 90.5 in August. The expectations index, arguably the best gauge of economic prospects (see chart), has posted successive increases since the start of the year, indicating economic growth may have picked up in Q3. We also expect positive data from the US this afternoon, with initial jobless claims forecast to post another fall in the week ended September 19 and a fifth successive rise in existing home sales in August. In the UK, Spencer Dale, MPC member and chief economist at the BoE, takes to the stage at 13.15 in Exeter. In other events, the US Treasury will sell a further $29bn of (7- year) notes this evening.

For more information: Emile Abu-Shakra Manager, Media Relations Lloyds TSB Group Media Relations Tel 020 7356 1878 http://www.lloydstsbcorporatemarkets.com/

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