ANALYSIS:The British prime minister's delight was evident in the summit's upbeat conclusion, writes FRANK MILLAR.

IN A surprisingly upbeat conclusion to the G20 Summit, UK prime minister Gordon Brown was able to announce agreement on $1 trillion of additional resources to help kickstart the global economy – over and above “the largest macro-economic stimulus” the world had ever seen, amounting to $5 trillion by the end of next year.

Some sceptical journalists questioned the amount of actual “new money” in this new deal, suspecting that the announced extra trillion in resources would be in the form of loans and guarantees precisely because the G20 leaders had been unable to agree a new international fiscal stimulus.

Signalling an important advance on the previous much publicised Anglo Saxon/Franco-German dispute, however, a delighted Brown pointed to a final communique inviting the International Monetary Fund to monitor fiscal stimulus measures already in place, report back to a further G20 summit later this year and recommend action as appropriate.

With agreement also on a radical package of proposals to repair the international financial system, hugely strengthen financial regulation, “clean up the banks” and end the “rewards for failure” culture, a delighted German chancellor Angela Merkel described yesterday’s outcome as “a very, very good, almost historic compromise”.

Hailing “a new consensus” between the leaders of the world’s wealthiest countries, Brown unveiled the key pledges agreed by the “Group of Twenty” in their commitment “to do whatever is necessary” to:

- restore confidence, growth and jobs;

- repair the financial system to restore lending;

- strengthen financial regulation to rebuild trust;

- fund and reform international institutions to overcome the current crisis and prevent future ones;

- promote global trade and investment and reject protectionism;

- build an inclusive, green and sustainable recovery.

With the planned delivery of a $5 trillion fiscal expansion raising output by 4 per cent by the end of 2010, the leaders promised to take whatever action necessary to secure a faster return to growth and invited the IMF to assess regularly the actions taken and further actions required.

The additional $1 trillion will be available through the IMF and other international institutions to help kickstart the global economy, meet balance-of-payments needs and provide social support for countries in crisis. The leaders also agreed $50 billion in support for the world’s poorest countries, through IMF gold sales and with a firm commitment to meet their millennium development goals.

Vowing they would not retreat into “financial protectionism”, particularly measures constraining worldwide capital flows, especially to developing countries, the G20 leaders committed another $250 billion to support trade finance and invited the World Trade Organisation together with other international bodies “to monitor and report publicly” on their adherence to their anti-protectionist undertakings.

Of the proposed crackdown on tax havens and sanctions against those refusing to comply, Brown said he believed the summit marked “the start of the end” of tax havens, suggesting “people will see it as increasingly unsafe to be in a country” regarding itself as such.

In terms of avoiding any repetition of the current crisis, the leaders said many failures in the financial sector and in financial regulation and supervision were fundamental causes of the current economic crisis and that confidence would not be restored until trust was rebuilt in the financial system.

A new Financial Stability Board would collaborate with the IMF to provide early warning of macroeconomic and financial risks and actions needed to address them. It was agreed to reshape regulatory systems and extend regulation and oversight to all systemically important financial institutions, instruments and markets – including, for the first time, systemically important hedge funds.

While stressing there was “no quick fix” to the economic crisis, Brown said he believed people in Britain and across the world could have greater confidence that the financial failures that had cost so much damage were being addressed, and that, “as a result . . . the recovery which is much needed in every part of the world will advance faster”.

In an endorsement certain to delight Brown and boost the prime minister’s hopes for a domestic political “bounce”, Barack Obama said yesterday’s “historic” gathering could prove “a turning point” in the search for economic recovery. “By any measure the London summit was historic,” said Obama: “It was historic because of the size and the scale of the challenges we face, and because of the timeliness and the magnitude of our response.”