G20 summit was no Bretton Woods, not yet anyway

Reshaping the global financial markets has now been on the agenda since the banking world almost fell over last month. The media has been speculating that we would see a Bretton Woods mark 2, while at the same time pointing out that it took two years of discussion to get there.

The obvious conclusion from this is that the G20 summit is the beginning of the process and not the end.

For the record, Bretton Woods was a re-organising of the global financial system. Its aim was to establish stability after a devastating economic depression and a catastrophic world war. The two institutions to emerge from the meeting were the IMF and the World Bank.

The G20 summit took place this weekend and the attendees have agreed an action plan. This will be reviewed in April 2009.

If anyone has questioned whether we actually need another Bretton Woods it must have received scant press coverage. At least, I haven't spotted it. There appears to be a consensus that something must be done.

Gordon Brown has been arguing for a coordinated fiscal stimulus. That certainly wouldn't need a Bretton Woods style agreement. What might, is the Prime Minister's proposals for 'supervisory colleges' that regulate banks across borders.

At some point we may well see a new global agreement or treaty that sets out a framework for financial activity. It won't happen in April either. It might be agreed by the end of 2009 or perhaps in 2010.

One clear indication that this was the way things were going was the return of Peter Mandelson to the British Government. Mandelson was the EU Trade Commissioner. His appointment caught everyone by surprise. At that point, the words Bretton Woods had not even been whispered. But you don't bring someone with Mandelson's breadth of experience back simply to appease the Blairite wing of the Labour party. Whether, Mandelson is the right or wrong person for the job, whether we need another global treaty and whether the answer to both is yes but for some reason we don't get it, isn't the point. I am no expert in these areas. I hope I have some ability to bring insight into what is going on in this turbulent political and economic world.

Another thing that could well happen is a general election in Britain in 2009. After the Labour party's recent success in the Glenrothes by-election the media have been speculating that Labour might go earlier than they expected.

But victory in a by-election isn't the sole reason for going to the country.

In 2009 the recession will have hit. Brown will have positioned himself as the man capable of leading Britain out of it, of making the right decisions and leading the world. A meeting of the G20 will take place in April further cementing his status. That meeting might take place in the UK.

If Brown calls an election in May or June next year his advisers could make the case that Labour was capable of winning even if the polls do not give them a dramatic lead. If he waits until 2010, the voters will have seen the consequences of the recession and the policies to deal with him. That risks giving the Opposition a lot of potential ammunition. Even if the policies work, it is perception that will matter. If people feel gloomy and blame the Chancellor of the world, Labour won't stand a chance.