ANGELA MERKEL warned fellow world leaders yesterday not to make the fight against global imbalances the central issue of a meeting of the world’s 20 largest economies, which began in Pittsburgh last night.

At the last G20 summit in April, the US and Britain disagreed with France and Germany about the need for government-financed economic stimulus packages costing hundreds of billions of euro. Europe and the US have different priorities again in Pittsburgh.

German chancellor Angela Merkel said it was vital to improve financial regulation: “We have to make sure we learn the lessons of the crisis and make sure it is not repeated. Pittsburgh will be decisive in determining whether the subject of financial market regulation continues to be a central issue. For us, it is the most important subject at the meeting.”

Leaders at the summit are acutely aware how precarious economic improvements are. On Wednesday, the US Federal Reserve announced the US economy has begun to grow again.

“We are on a good path but the impetus could fade at any time, Ms Merkel said.

Politicians must have the courage to do things which are not immediately applauded by banks worldwide.

Speaking in Berlin before boarding her flight, Ms Merkel came close to accusing the US and Britain of backtracking on the issues of financial market regulation and limits on bonuses for bankers by shining the spotlight on the export-oriented economic policies of Germany and China.

“We should not start looking for ersatz issues and forget the topic of financial market regulation,” she said.

Berlin has grown concerned in the past few days that the US and the UK could use Pittsburgh, the third time G20 leaders have met to forge a response to last year’s financial crisis, to put pressure on Germany and China to change their economic policies.

Early drafts of the meeting’s final communiqué sent by Michael Froman, economic adviser to US president Barack Obama, were rejected this week because of their focus on global imbalances.

Ms Merkels finance minister, Peer Steinbrück, has accused bankers of trying to block the introduction of stricter financial regulations.The French president Nicolas Sarkozy wants to put a cap on bankers bonuses and pay, but this is opposed by Washington.

Dan Rooney, the US ambassdor to Dublin, returned to his native Pittsburgh to open a conference at Carnegie Mellon University, in parallel to the G20 summit. “This summit is building on the foundations laid at the Washington and London Summits, Mr Rooney said. – (Additional reporting, The Financial Times Limited 2009)

Three goals for G20 to tackle crisis: page 5